Russia’s state-run energy giant Gazprom has said in accounts published on Wednesday that the price of gas exported to Europe has fallen to its lowest level in 15 years, bne Intellinews reports.
In the third quarter of this year, the average price per 1,000 cubic meters, taking into account excise tax and customs duties, amounted to $169.8, down 32% from the same period a year ago, when it exceeded $250, the documents show.
The last time Russian gas for EU exports was this cheap was in 2004 when it cost $137.7, but the price rose again in 2005 to over $190.
The company cited excess supply on the market and rising competition from liquefied natural gas (LNG) as the main reasons for the slump in price. The cost of LNG in Asia has halved after producers began sending excess energy to Europe.
Gazprom last week posted a 45% year-on-year decline in net profit under IFRS in 3Q19 to 212 billion rubles ($3.3 billion), attributed to the decline in export deliveries and lower gas prices in Europe. Gazprom saw total sales decline to 1.6 trillion rubles in the reporting quarter versus 1.9 trillion rubles for the same quarter of 2019. Exports to European and non-CIS sales were down by 37% y/y, with prices of natural gas averaging to $169.8 per 1,000 cubic meters from $250.8 last year.
The company was only able to partially compensate for the losses by raising prices in the domestic market and for neighboring countries.
Nevertheless, Gazprom was supported by the 5% q/q higher top line of its oil subsidiary Gazprom Neft thanks to strong downstream (refining) performance. Another boost came from the $1.1 billion revaluation gain associated with the recent treasury stock sales, which brought Gazprom’s net profit in line with expectations, bne Intellinews writes.
