Daily Energy Report

Russian gas exports to Europe, shortage of sour crude, China’s diesel exports, India’s strategic petroleum reserves, frequent fires at Pemex’s refineries, Alberta’s wildfires, and more

CHART OF THE DAY: Russian Pipeline Gas Exports to Europe

Summary

Note: This section is about Russian piped natural gas, and doesn’t include LNG.

According to the EOA’s calculations for April 2023, which are based on data from the European gas transmission platform (Entsog), the Kremlin-controlled Gazprom shipped 2.2 billion cubic meters (bcm) of gas to Europe (EU and Ukraine) via Ukrainian territories and the TurkStream pipeline through Turkey, an uptick of 4% MoM (Figure 1 above), but sharply down from 8.1 bcm in April last year.

Our calculations show that Gazprom shipped 1,181 million cubic meters (mcm) of gas via Ukraine through the Sudja gas station, of which 153 mcm of gas was offloaded in Ukraine, while the remaining 1,028 mcm was shipped to EU member states. Gazprom’s average daily gas exports through the Sudja gas station slightly declined in April to 39.4 mcm, down from 40.5 mcm in March.

On the other hand, the total amount of gas Gazprom shipped in April via the TurkStream pipeline, sharply increased to 1,012 mcm, from 850 mcm in March, an uptick of 19% MoM.

Using the two transit routes, Gazprom’s gas exports to EU member states totaled 2.04 bcm in April, compared to 1.945 bcm in March, a 5% increase MoM. Since the start of the year, Gazprom shipped just shy of 8 bcm of gas to Europe (including Ukraine), our calculations show. Back in 2022, the EU imported some 62 bcm of gas from Russia via pipelines as per a recent report published by the European Commission.

Under current conditions, Gazprom can ship gas via transit through Ukraine (Sudja gas station) and through the TurkStream pipeline. Gazprom’s gas shipments through the Nord Stream 1 and the Yamal-Europe gas pipelines, meanwhile, have been suspended since last year due to a dispute between Russia and the EU, and because of attacks on the Nord Stream 1 in late September. Together, the pipelines had a total annual capacity of 88 bcm.

EOA’s Main Takeaway:

The share of Russian gas in Europe’s total gas imports remains large (piped and LNG), and the volume cannot all be replaced this year with alternative supplies.  In case of a severe winter, Europe’s dependence on Russian gas will only increase.

STORY OF THE DAY

REUTERS: Russian Urals prices strengthen in China, driven by global sour shortage

Summary:

Citing traders and its own data, Reuters said today that cargoes of Russian Urals crude set for delivery to China in late June and July are "estimated at minus $7.5-8 per barrel to ICE Brent....some $2 per barrel firmer than the previous month's estimates.” Such prices are the highest since Western sanctions on Russia's oil industry went into effect in December 2022, Reuters said, especially amid a global shortage of sour (high sulfur) crude oil.

EOA’s Main Takeaway:

The rise in Urals prices is the result of several factors we discussed on various occasions in previous reports, and which we summarize below: