Gazprom seeks bigger gas market share in Europe after bumper exports

VIENNA – Reuters

Russia’s Gazprom is looking to gain an even larger gas market share in Europe following record-high 2018 exports, expecting a decline in Europe’s gas output combined with rising demand, a senior manager at the company has said.

Last year it sold more than 200 billion cubic meters of gas to Europe, including Turkey, while its gas market share in the region rose to more than a third.

Elena Burmistrova, in charge of the Russian company’s exports, said Gazprom would be able to offset a production decline in the European Union, mainly at the Netherlands’ Groningen, once Europe’s largest natural gas field.

“North Sea production is also gradually declining ... So, the space for Russian gas is being freed up,” she said on the sidelines of the European Gas conference in Vienna.

EU gas production will halve by 2040, the Paris-based International Energy Agency has said.

Moscow has piped gas to Europe from its fields in Siberia and northern Russia for more than 50 years. It can ill afford losing the lucrative market for Kremlin-run Gazprom, whose sales account for over 5 percent of Russia’s $1.6 trillion economy.

Burmistrova said Gazprom was striving to raise its market share in Europe, where the company generates two thirds of its gas sales.

“According to preliminary estimates, our share (in Europe) stood at 34 percent in 2017, while in 2018 it could have reached around 35 percent,” Burmistrova said in remarks cleared for publication on Feb. 6.

Russian energy sales have become increasingly politicized since 2014 following the annexation of the Crimean peninsula from Ukraine, accusations of meddling in the U.S. presidential election in 2016 and a nerve gas attack in Britain.

Gazprom last year escaped the specter of big fines in a case that had dragged on for seven years after it clinched a deal with EU antitrust regulators to reform its pricing structure and allow rivals a foothold in Eastern Europe.

Burmistrova said Gazprom did not want to look too “aggressive” in the eyes of Europe with its plans to boost sales.

“We don’t set a target of gaining 40 or 45 percent of the (EU) market,” she said.

Some European countries, mainly in Eastern Europe, have voiced concern about Russia’s growing energy clout.

The Gazprom manager said the company had proven to be a reliable gas supplier and that its exports in Europe would not suffer because of politics.

However, Gazprom’s exports have been jeopardized by a shale gas production boom in the United States and President Donald Trump’s plans to sell “vast amounts” of U.S. liquefied natural gas (LNG) to Europe.

U.S. LNG shipments to Europe totaled 3.23 million tons, or 48 cargoes, in October to January, compared to 0.7 million tons, or nine cargoes, a year earlier.

The United States is now second only to Qatar, the world’s largest LNG producer, as an LNG supplier to Europe, Refinitiv Eikon data showed.

Burmistrova played down the danger to Russian gas dominance in Europe from the United States.

“We will always be competitive against American LNG,” she said.