Gazprom will temporarily shut two Russian gas export pipelines to Europe as it faces challenges in raising output, but has nonetheless decided not to book additional spare transit capacity across Ukraine that it was promptly offered.
The suspensions come at a time of rising gas demand in Europe, with spot prices riding high at the continent's trading hubs.
Gazprom is facing production challenges due to depletion at its major fields in the Yamal-Nenets region in West Siberia and the re-introduction of Covid-19 restrictions.
The state-controlled monopoly will halt pumping of gas to Europe on two main export routes: the Yamal-Europe pipeline across Belarus and Poland to Germany; and the Nord Stream offshore pipeline, also to Germany.
The Yamal-Europe facility will be closed for maintenance from 6 to 10 July. Nord Stream will shut from 13 to 23 July.
This will lead to an estimated reduction of supplies of more than 2 billion cubic metres during the next month, Gazprom said.
Mikhail Krutikhin, a partner at Moscow consultancy RusEnergy, said the closures are reminiscent of a situation in the summer of 2005, when Gazprom was unable to increase production to meet rising demand at home and in Europe, instead shutting export pipelines to carry out maintenance.
Earlier in June, the company said it had increased production by more than 16% year on year to almost 222 Bcm between January and May, with its largest greenfield on the Yamal Peninsula, Bovanenkovo, hitting its capacity ceiling in February.
However, executives also revealed that, due to a lengthy cold spell earlier this year and unabating energy demand, Gazprom has lagged behind its regular schedule of replenishing reserves in underground storage reservoirs in Russia and Europe.
Seeing strong demand in Europe, earlier this week, Ukraine’s gas transmission operator has offered Gazprom the opportunity to book additional transit capacity to Europe for July at a rate of about 64 million cubic metres per day — or about 2 Bcm for the month.
In July, Gazprom committed to delivering gas across Ukraine to Europe at 124 MMcmd, just 15 MMcmd higher than the minimal agreed daily volume under its transit agreement with the country.
Observers also pointed to the growing difficulty in bringing more personnel to the Yamal-Nenets region to increase drilling and well workover activity following the outbreak of a more contagious strain of Covid-19.
Restrictions are being re-introduced in the region as the number of new daily Covid-19 cases there has quadrupled from May levels.
Authorities have ordered the deployment of police officers to airports and train stations to check if all arriving shift workers have a fresh negative Covid-19 test or a vaccination certificate.