Russian state controlled gas giant Gazprom has admitted an almost 10% drop in its total gas production this year, with demand for gas sold under long-term contracts falling to 452 billion cubic metres because of the Covid-19 economic impact.
Speaking in Moscow, Gazprom executive board chairman Alexei Miller said that the decline has not affected the company’s ability to increase output when needed, estimating spare production capacity at about 100 Bcm per annum.
Despite a double digit percentage decline in gas exports to Europe in the first half of this year, Miller said deliveries to Europe picked up significantly in the fourth quarter and are expected to remain firm in the first quarter of 2021.
Gazprom had earlier increased its bookings of transit pipeline capacity over Ukraine for January, despite previously forecasting a 38% decline in gas shipments across the country in 2021. The forecast was made in December 2019, at the time of signing a new transit agreement with Ukraine.
According to Miller, gas deliveries to Turkey, Poland, the Netherlands and Slovakia may actually have exceeded 2019 levels in 2020, but he acknowledged that total annual gas exports are set to decline by over 10% to 179 Bcm.
Gazprom has also attempted to rebuff concerns that the company may struggle to respond to demands for higher gas shipments to China from the Chayanda gas field in East Siberia via the Sila Sibiri pipeline.
The company has said that it expects to grow gas deliveries to China from 67% to 81% above the maximum contractual daily volume for this year – estimated at 14 million cubic metres - in the period between 29 December and 31 December.
Earlier this year, construction and drilling work on the Chayanda field was interrupted for about two months after thousands of shift workers were evacuated to halt the spread of Covid-19 at its locations.
Gazprom has made commitments to to deliver 10 Bcm of gas to China in 2021, compared with 5 Bcm in 2020, but the actual result for 20202 is not expected to pass 4 Bcm because of the drop in Chinese gas purchases between January and June, when the country was battling with the Covid-19 pandemic.