Russia's Gazprom increased its share of the European gas market in the third quarter significantly, but the state-controlled gas monopoly also saw its debt swell in the period.
Gazprom reported a 21% rise in its pipeline gas exports and sales to Europe to more than 56 billion cubic metres in the third quarter as against the second quarter when European countries had reduced consumption due to Covid-19-related lockdowns.
As a result, Gazprom’s estimated market share rose to 34% in the third quarter against 28% in the beginning of 2020, according to the company's deputy department head Alexei Finikov.
Gazprom’s gas sales in Europe also increased because the company lifted gas from storage facilities in Europe for delivery to customers between July and September — in previous years, the company pumped gas into storage during this period, market observers noted.
While Gazprom executives expect European demand for Russian pipeline gas to remain robust in the fourth quarter and next year, Gazprom has also acknowledged that its pipeline gas exports to Europe will continue to be affected by US liquefied natural gas exports and gas demand in Asia.
Gazprom said in its presentation that the rise of its gas sales to Europe occurred after a drop in the US liquefaction capacity utilisation to 35% from 90% this year, and a higher premium for LNG on the Asian markets that had pulled spot LNG cargoes away from Europe.
On the domestic market, the third quarter brought another heavy blow to Gazprom’s revenues, with sales dropping to 34 Bcm against 40 Bcm in the second quarter and 77 Bcm in the first quarter of this year.
Unable to reduce its operating costs and investments to respond to the market downturn, Gazprom has had to use cash to cover the shortfall between revenues and spending.
As a result, cash held at bank accounts dropped to 67 billion roubles ($890 million) by 30 September as against 676 billion roubles as of 31 December 2019, according to its presentation on Tuesday.
The decline led to the rise of net debt to over $55 billion against $40 billion at the end of 2019, it said.