By OGJ editors
HOUSTON, Jan. 23 -- A further drop in Russian exports of natural gas to Europe is expected due to severely cold weather, according to a Jan. 20 statement from East European Gas Analysis, Malvern, Pa.
"We expect the average daily flow of Russian gas from Ukraine to Europe to drop further to 325-330 million cu m/day," 13-15% lower than estimated contracted volumes, EEGA reported.
"Colder winter means more gas consumed in Russia and less available for exports," EEGA said.
According to weather forecasts, the extremely cold weather in European Russia is expected to last throughout the month. The mean temperature in Moscow is expected to be −25º C.
Mikhail Korchemkin, EEGA managing director, said: "It will be the record long cold wave in Central European Russia. In this part of the country, the share of natural gas in the fuel balance of heat and power plants is close to 100%."
In the last 15 years, December 2002 was the coldest month in Russia and Ukraine, but this month "is likely to beat the Russian record and stay below the Ukrainian one," the report said.
Currently, export contract volumes are higher than in 2002-03, said EEGA, when the European contracts of OAO Gazprom were fulfilled. The drop in supplies to Europe is caused mostly by reduced gas flow from Russia to Ukraine, the analyst said. "In the first days of January, the cuts were made for political reasons and now for natural ones," it said.
Storage facilities in Ukraine are able to add 200 million cu m/day, EEGA reported. It said three fourths of total storage capacity is within 200 km of Ukraine's western border and can be used only for exports.
In Russia, Gazprom is "doing everything to provide steady supplies of gas," EEGA believes. On Jan. 19, Gazprom's gas production reached a record 1.684 billion cu m/day.
Storage withdrawal as well is close to maximum capacity—over 550 million cu m/day, according to EEGA. Russian industrial consumers were unable to switch to backup fuels as required by the emergency schedule, which has caused shortages at export terminals. "Italy, Hungary, and Bosnia were the first to observe the shortage because these countries are located at the end of export routes of Gazprom," EEGA said.
It said Gazprom can reverse the flow from southern Russia to Ukraine and supply gas from giant underground storage facilities in the Stavropol and Krasnodar regions. Withdrawal capacity of these facilities exceeds the region's needs.