Oil's Plunge a Helping Hand as Gazprom Cements German Gripby and
Russian gas exports to Germany rose to record last year
Germany got 55% of its gas imports from Russia: Marex Spectron
Russia increased its European natural gas market dominance last year, supplying more than half of Germany’s imports as oil’s longest slump on record made its fuel more attractive.
Germany, Europe’s biggest gas user, got about 55 percent of its foreign fuel from Russia last year, and as much as 75 percent in the fourth quarter, according to Georgi Slavov, the London-based head of research at Marex Spectron Group Ltd., who estimated typical average levels are 30 to 50 percent. Gazprom PJSC boosted shipments to Germany by 17 percent in 2015, the Moscow-based company said this week.
Russia has prioritized the expansion of the Nord Stream pipeline directly to Germany, in the face of opposition from transit nations including Ukraine, as souring relations halted a planned link to Turkey and stagnating demand in Asia slowed expansion to China. The company has also fought customer demands to decouple its prices under long-term contracts from crude. Brent slipped 35 percent in 2015 in a third consecutive annual drop, cutting into income.
“Germany will remain an important buyer of Russian gas in the future for sure, especially since Gazprom’s pivot to Asia is not going according to plan and the Turkish Stream pipeline is currently halted,” Sijbren de Jong, an energy security analyst at the Hague Centre for Strategic Studies, said by e-mail. “Gazprom has a slight competitive price advantage due to having the bulk of its contracts pegged to the price of oil.”’
The world’s biggest gas producer Friday reported a third-quarter net loss of 2 billion rubles ($26.1 million) compared with profit of 105.7 billion rubles a year earlier, partly because commodity prices slumped.
Gazprom supplied 45.3 billion cubic meters (1.6 trillion cubic feet) to Germany last year. That compares with a 7.1 percent increase in Norwegian exports to 47.9 billion cubic meters last year, according to data from Gassco compiled by Bloomberg, which doesn’t take account of onward shipments from Germany.
Statoil ASA, Norway’s state-controlled oil company, previously said it no longer has oil indexation in its German contracts, while most of its European contracts are linked to spot prices. Norway shipped record-high volumes to Europe last year, Gassco said Jan. 11.
Statoil doesn’t compete for market share and sells gas where it gets the highest price, Elin Isaksen, a spokeswoman, said by e-mail. Gazprom spokesman Sergey Kupriyanov said he wasn’t immediately able to confirm the estimates of the company’s German market share when reached by telephone.
“They need gas and there are no other suppliers that are capable of boosting volumes and with competitive prices at the same time,” Kupriyanov said.
Russia may increase its gas exports to Europe this year because of colder weather in the region, Russian Energy Minister Alexander Novak said Friday on Russia’s RBC television. Gazprom boosted shipments by 8 percent in 2015 to 159.4 billion cubic meters.
German gas consumption rose 5 percent to 80.3 billion cubic meters last year, mainly because of colder weather, according to utility lobby group BDEW. The country typically gets 35 percent of its needs from Russia, 32 percent from Norway, 20 percent from the Netherlands, 9 percent from domestic production and 4 percent from other suppliers, according to Wingas GmbH, a Gazprom-owned gas trading unit in Germany.
Russia, which has been supplying gas to Germany for more than four decades, gets about 28 percent of its total revenue outside the former Soviet Union from the EU nation. As crude declines filtered into gas prices, the company’s revenue from shipments to Germany fell more than 15 percent in 2015 to about $10 billion, according to Bloomberg calculations based on Gazprom export data and pricing estimates from the International Monetary Fund.