Russia's Gazprom is taking steps to increase its share of the global gas market amid uncertain demand and the onset of new LNG supplies from the US and Australia.
There has been speculation that Russia would embark on a market share defense strategy -- similar to that undertaken for the past year by Saudi Arabia in the oil market -- in the face of impending exports of US LNG.
Gazprom's board of directors on Tuesday approved an updated list of measures, which it said were "aimed at increasing the company's share in the global gas market."
"Amid industry-wide changes, the updating of this document has an important role to play for the successful business development of Gazprom as a global energy company," it said.
Gazprom has been focusing on its key European market over the past year despite the slump in prices.
In particular, its sales to the lucrative Western Europe market have risen -- in 2015 its exports rose by more than 10% to 130 Bcm -- while its overall share of the European market rose last year to 31%.
This, CEO Alexei Miller said Tuesday, was "an historic high."
Russian gas flows to Europe so far in 2016 have been higher than the same period last year, with supplies to Italy having risen in recent weeks.
Miller said Wednesday that supplies to France in the first 14 days of February had doubled to 400 million cu m compared with the same period last year.
The company said it was aiming for increased flexibility in its contracts with buyers as it looks to retain that share of the European market.
"In order to increase the competitiveness of Russian gas and to maintain the company's steady position in the key European market, Gazprom is improving contractual cooperation in pipeline gas supply," it said.
"In particular, the company has introduced new forms of trade -- the first auction for gas deliveries was a success," it said.
In September last year, Gazprom held its first auction for delivery into Germany, selling 1.23 Bcm of gas.
ASIAN EXPANSION, LNG GROWTH
Gazprom also said it wanted to expand its supply opportunities to the Asian market and had started making moves to shift its focus for gas supplies more toward the East, specifically to China, given stagnant European demand.
"A key element in the Gazprom's geographic presence expansion is the reinforcement of the company's position in the Asian market. An increase in pipeline gas supply to the Chinese market is of strategic importance," it said.
Russia has a number of deals in place for future supplies to China, with volumes contracted to date at some 68 Bcm/year and with plans under consideration to boost exports by a further 30 Bcm/year.
But with increasing concern about the rate of Chinese gas demand growth, Moscow may be looking to soften its stance on China supply, with some media reports saying volumes would be reduced.
A senior Russian government official said in January that Moscow was re-examining its plans for Chinese supplies.
Gazprom also said the growth in LNG supply would play a "crucial role" in gaining a bigger market share.
"It is therefore essential to ensure and improve Gazprom's global LNG portfolio flexibility primarily through the company's own production," it said.
"Large-scale LNG production is complemented by the expanding geographic presence and the increasing small-scale LNG production," it added.
Against the background of a lower price environment, Gazprom also said it would look to optimize the costs of projects.
This, it said, could include considering various project participation options, including joint ventures and asset swaps.
Gazprom said it would seek to further improve its cost optimization measures in 2016.
"In an unstable economic environment this work is highly relevant, therefore Gazprom is using all possible means and exploring new opportunities for further cost optimization," it said.
