June 29, 2018 / 2:52 PM / 5 months ago

Gazprom aims for record gas sales to Europe despite U.S. competition

ST PETERSBURG, Russia (Reuters) - Russia’s Gazprom expects record high gas sales this year in Europe, Chief Executive Officer Alexei Miller said on Friday, downplaying the threat posed by imports of U.S. liquefied natural gas (LNG).

FILE PHOTO: The logo of Russian gas giant Gazprom is seen on a board at the St. Petersburg International Economic Forum 2017 (SPIEF 2017) in St. Petersburg, Russia, June 1, 2017. REUTERS/Sergei Karpukhin

Gazprom has managed to gradually increase its market share in Europe, its main market, to around 34 percent despite the general aversion to Russian energy supplies, which became increasingly politicized following Moscow’s annexation of Crimea in 2014.

Gazprom’s Chief Executive Officer Alexei Miller said on Friday the Russian gas exports to Turkey and Europe outside of the former Soviet Union may exceed 205 billion cubic meters (bcm) this year, up from 194.4 bcm last year, also a record-high.

“There are prospects and the prospects are related to falling domestic gas production in Europe, while demand for gas is rising,” Alexander Medvedev, a deputy of Miller, told an annual general meeting of Gazprom’s shareholders.

“Gazprom has all the capacity to supply gas to Europe in the amount Europe needs.”

Analysts say sea-borne liquefied natural gas supplies from the United States may undermine Gazprom’s position on the European gas market.

The United States exported its first cargo of LNG gas last year. Some European nations, including Lithuania and Poland, started to reduce their dependence on Russian pipeline gas by importing LNG from the United States.

However, Miller said that due to high production and transportation costs, LNG from the United States will not be competitive in Europe.

He said U.S. LNG consumption in Europe last year was a mere 2 million tonnes.

TURKSTREAM

Miller also said on Friday that Gazprom plans to start supplying Bulgaria, Serbia and Hungary via a new gas link after it finishes the second line of the Turkstream gas pipeline which will run from the Russian Black Sea coast.

Turkstream is a part of Moscow’s efforts to bypass Ukraine as a gas transit route to Europe, which receives around a third of its gas needs from Gazprom.

Gazprom is building the Turkstream in two lines, with capacity of 15.75 billion cubic meters of gas per year each, the first of which will supply Turkey and the second southern Europe.

The second line of the Turkstream will be directed to Bulgaria, Bulgarian Prime Minister Boyko Borissov said last month after talks with Russian President Vladimir Putin.

“Gas via the Turkstream, at the start of 2020... could run via the gas transmission systems of Bulgaria, Serbia and Hungary... The first and the second lines of Turkstream will be operational by the end of 2019,” Miller said on Friday.

Additional reporting by Vladimir Soldatkin; Writing by Vladimir Soldatkin and Katya Golubkova; Editing by Elaine Hardcastle

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