Gazprom's Export Price Continued To Fall Below The Level Of Profitability
The average price of Gazprom's gas exports in June 2020 fell to $82 per thousand cubic meters from $94 in May, according to data from the Federal customs service of Russia. This price is lower and lower than the break-even price of Russian gas supplies to Europe.
According to Interfax calculations, the cost-effective export level for Gazprom is at least $100 per 1 thousand cubic meters: $13 - production cost, $14-met, $27-transportation across Russia, at least $20-transportation to target markets in Europe-a total of more than $70, and then you need to add a customs duty of 30%. And according to Fitch Ratings, the break-even level is $105 per thousand cubic meters.
In January 2020, according to the Federal customs service, the average price for Gazprom's export portfolio was $162, in February - $143, in March - $125, in April - $109, in May - $94 per thousand cubic meters.
Thus, for the second reporting month, Gazprom sells gas abroad at a loss.
The price of gas under Gazprom's contracts continued its steep peak, although spot quotes began to recover from the historical minimum values reached in May.
The revenue from gas exports disclosed by the Federal customs service for 27 Russian gas supply countries is $1.1307 billion for June 2020, according to the customs operational summary. It does not contain data on gas supplies to China, Switzerland, Denmark (published with a delay), as well as to Macedonia, Bosnia, and Herzegovina. Besides, data on deliveries to Turkey, as well as possibly to Germany and the Netherlands, are subject to significant additions.
However, this is the only price indicator in Russian gas export statistics. Delivery countries the Russian customs service publishes no information about the price.
In May 2020, revenue from gas exports was equal to $1.123 billion, in June 2019 - $2.56 billion.
The volume of export deliveries for this sample in June 2020 was 13.831 billion cubic meters, after 11.924 billion cubic meters in May 2020, and 15.652 billion cubic meters in June 2019.
A significant part of Gazprom's export portfolio is linked to various spot indices. In June, the spot price in Europe (we take the quotes "a day ahead" of the Dutch TTF) recovered slightly - to an average of $57 per thousand cubic meters from $52 on average in May. Now the price of TTF has recovered to the level of $86 per thousand cubic meters.