Russia's Gazprom may still hold a gas auction for delivery into Europe in 2017, but a decision on whether to organize a new sale would depend on whether there was additional demand for gas in its key European market later in the year, the head of the company's export arm said Tuesday.
Speaking during a press conference in Moscow, Gazprom Export CEO Elena Burmistrova said the company was already well ahead of its schedule in terms of gas supplies to Europe, meaning an auction may not be necessary.
Gazprom Export has held three gas auctions since September 2015, two for gas deliveries to Germany and neighboring European markets, and one for delivery into the Baltic region.
The company has said the auctions are evidence of its increasingly flexible approach to gas sales in Europe.
"We do not exclude the possibility of holding an auction in 2017. I cannot give a date, but it would be closer to the winter," Burmistrova said.
However, she added that the motivation for holding an auction would be whether there was a need to place additional volumes on the market.
Gazprom deputy CEO Alexander Medvedev said at the same press conference that the company was ahead of its export schedule for 2017 by 9.5 Bcm.
The company is well on track in 2017 to break the record level of supplies to Europe and Turkey from 2016 of 179.3 Bcm, he said.
Medvedev clarified that last year Gazprom Export supplied 178.3 Bcm, with a further 1 Bcm exported by its subsidiary Gazprom Schweiz AG.
"Because 2017 began in a very impressive way, with new daily records being set, we are ahead of our export schedule by 9.5 Bcm," he said.
"Last year's level is something that we will definitely be able to exceed, and a new record may be achieved."
DEMAND PICTURE
Medvedev said demand in Europe for Russian gas was being driven by the need to refill underground storage facilities, which at the end of the winter were are their lowest level for the past 10-15 years.
"There is active gas injection by ourselves and counterparties to ensure security of supply during the autumn-winter season," he said.
In the longer term, too, demand in Europe looked robust, he said, pointing to the UK as an example of a country using ever higher quantities of gas due to its policy on taxing carbon emissions and phasing out coal-fired power generation.
The policy decisions taken by the UK, he said, showed that "you can turn the energy balance upside down." He said gas had a "very good future" in Europe, with Gazprom still contracted to supply 4 trillion cu m of gas to European customers with long-term take-or-pay contracts.
"And if you look at the future of demand, it may turn out that even with Nord Stream 2 and TurkStream, the gap between supply and demand will not be covered," he said.
If fully implemented, Nord Stream 2 and TurkStream will between them add 86.5 Bcm/year of new export capacity to Europe and Turkey.
