Gazprom will stop the Power of Siberia for preventive maintenance
Three months later, Russian Gazprom will stop the export of natural gas to China through the Power of Siberia gas pipeline for preventive maintenance. According to Lenta.ru, this is happening amid the drop in demand for natural gas in the Celestial Empire.
The situation in the Chinese gas market is not the most favorable for gas suppliers. Coronavirus and excess LNG contribute to a drop in fuel demand. A few days ago, Reuters reported from Singapore that PetroChina, the largest Chinese gas importer, had announced force majeure with regard to imports of natural gas, including liquefied and pipeline fuel supplies. Reuters emphasized that the company sent a force majeure notification to pipeline gas suppliers, as well as at least one LNG supplier.
In addition, TASS, quoting data of the Federal Customs Service, reported that Gazprom’s revenues from gas exports in January 2020 fell by 41.1 percent to be three billion dollars. Physical exports over the same period declined less - by 11.9 percent to be 18.3 billion cubic meters. Gazprom’s low deliveries at the beginning of the year were affected by both an abnormally warm winter and a record amount of gas accumulated in European underground storage facilities.
Experts expect that an excess of liquefied natural gas in the world could lower gas prices in Europe in late spring to be below $100 per thousand cubic meters. If this happens, the company will have to operate at a loss. Additional problems for the Russian gas giant will be the spread of coronavirus in Europe and a sharp drop in oil prices, the value of which is bound to the price of deliveries under long-term contracts.
A situation analysis shows that Gazprom’s decision to stop gas exports to China through the Power of Siberia for preventive maintenance is more than justified, even despite the fact that the gas pipeline was launched at the end of last year.
