Gazprom, a major Russian state-owned energy corporation, witnessed a significant 32% increase in pipeline gas exports to Europe during the first quarter of 2024, totaling 7.7 billion cubic meters. This growth, fueled by strategic pricing adjustments, underscores Gazprom’s ability to compete effectively in southeastern European markets.
1. Expansion:
- Gazprom’s pipeline gas exports to Europe soared by an impressive 32% in the first quarter of 2024, reaching 7.7 billion cubic meters.
- This remarkable growth was from Gazprom’s strategic pricing adjustments, enabling it to compete well in southeastern Europe’s markets.
2. Success of their Turk Stream:
- Gazprom’s TurkStream pipeline operated at nearly full capacity, supplying 3.9 billion cubic meters to southeastern Europe, significantly reducing the region’s reliance on spot LNG imports.
- Gazprom showed its power in the area by the fact that there was less LNG brought in through Greek and Turkish terminals.
3. Challenges Amidst Growth:
- Despite the surge in exports, Gazprom faced a reality of declining revenue, with estimates suggesting a 34% drop in earnings compared to the same period in 2023.
- This revenue decline was attributed to the relatively low export prices. This shows how Gazprom has to be careful, balancing between selling more gas and making enough money to stay strong financially.
4. Production Growth:
- In March, Gazprom’s total pipeline gas exports to Europe reached the highest levels since August 2023.
- Contributing to this growth was a notable increase in Russia’s overall gas production, driven by high demand amidst an unusually cold winter.
5. Setbacks and Hurdles:
- While Gazprom celebrated export milestones, the second largest natural gas producer after Gazprom, Novatek, encountered production halts in its Arctic LNG 2 project until at least the end of June
- Earlier challenges in February, including near cessation of feedstock gas production due to storage limitations and US sanctions against the project’s operator, compounded by a shortage of ice-class tankers, further hampered operations.
Gazprom’s expanding exports to Europe demonstrate its proactive approach to market fluctuations. However, challenges such as declining revenue highlight the need for Gazprom to strike a balance between market dominance and financial sustainability.
