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    Home » Weak gas prices worsen outlook for Gazprom’s revenues from sales to Europe

    Weak gas prices worsen outlook for Gazprom’s revenues from sales to Europe

    July 5, 2023
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    *Gazprom

    Moscow — Weak gas prices have lowered expectations for Gazprom’s revenues, which the Kremlin-controlled energy giant generates from sales to Europe, according to analysts and Reuters calculations.

    The fall in exporting revenues may exacerbate Russia’s budget deficit, already 117% of the annual plan due to heavy outlays to support Moscow’s military campaign in Ukraine and Western sanctions on its oil and gas exports.

    Gazprom’s gas sales to Europe, once its primary source of foreign currency revenues, have plummeted due to the crisis in relations between Moscow and the West.

    According to Reuters calculations, Russia’s piped gas exports to Europe reached around 12.1 billion cubic metres (bcm) for the first half of 2023, while they totalled 62 bcm for the whole of 2022, indicating a potentially serious slump this year.

    Gazprom has not provided forecasts for gas exports this year and has not replied to a request for comment.

    Ronald Smith, a seasoned analyst at Moscow-based BCS brokerage, expects Russian gas prices in Europe to average $445 per 1,000 cubic metres this year. That’s down from $830 as estimated by Economy Ministry for 2022.

    He forecasts Russian gas exports to Europe and Turkey will reach 50 bcm this year.

    If Russia keeps its gas exports to Turkey steady, it might reach 22 bcm in 2023, then sales to Europe would total 28 bcm. This might mean a fall in European revenues to $12.5 billion this year from around $52 billion in 2022, according to Reuters calculations.
    Reporting by Oksana Kobzeva; writing by Vladimir Soldatkin; editing by Christina Fincher – Reuters

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