Gazprom May Lose a Third of Its Gas Exports to Europe in 2022 — Analysts

(Reuters) — Kremlin-controlled Gazprom's gas exports to Europe could fall by around a third this year due to the crisis in Ukraine, rivalry with liquefied natural gas, and plans to switch to ruble payments, analysts said on Friday.

Russia accounts for around 40% of European gas supply, but the West has been trying to wean itself off Russian energy flows with increasing urgency since the country began what it calls its "special military operation" in Ukraine on Feb. 24.

Plans to charge "unfriendly" countries for gas sales in rubles have also undermined prospects for Russian gas exports, analysts said, as Europe said this amounted to "blackmail" and almost unanimously refused to comply.

Sergei Kapitonov from the Energy Centre at Moscow's Skolkovo School of Management said Gazprom supplies to Europe may fall by 40 billion- to 45 billion cubic meters (Bcm) this year from around 150 Bcm in 2021.

Sindre Knutsson, head of gas market research at Rystad Energy, said pipeline volumes can drop even further, "driven by a push from buyers to become less reliant on Russia, or by Russia holding back volumes, for example driven by a disagreement on which currency the gas should be paid in".

He also didn't rule out a stoppage in flows through Ukraine if the conflict prevents pipeline operations from continuing safely.

Gazprom has not disclosed its expectations for gas exports to Europe. The company did not respond to a request for comment.

Top consumers of Gazprom's gas in Europe in 2021 were Germany, which took 45.8 Bcm, Italy, taking 20.8 Bcm, and Austria, which received 13.2 Bcm.

Russia is Germany's top supplier, delivering just under a third of its gas, while Italy gets some 40% of its imported gas, and Austria 80% of its natural gas, from the country.

So far, only Hungary has agreed to move to the gas-for-rubles scheme, which involves buyers making foreign currency payments through Russia's Gazprombank, which would subsequently convert it into rubles. 

An internal European Commission note said last week that payment for Russian gas in rubles by European Union buyers would break the EU's sanctions regime against Moscow. 

Alexei Gromov of the Institute for Energy and Finance Foundation said Russian pipeline gas could be partially supplanted by sea-borne liquefied natural gas from the United States and from Russia's Novatek, which does not have to charge clients in rubles.

Gromov said Russian pipeline gas exports to the European Union may reach some 105 Bcm this year.

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