Azernews.Az

By Bloomberg

Gazprom PJSC, the world’s biggest gas producer, faces the lowest export prices in more than eight years as oil slumps, signaling a further drop in its foreign- currency earnings and contribution to Russia’s troubled economy.

Each cubic meter of natural gas delivered abroad by the state-run producer provided 31 percent less revenue in June compared with a year ago, Bloomberg calculations based on Russia’s customs data show. The price of shipments via pipeline to the European Union, Turkey and the former Soviet Union averaged about $223 per 1,000 cubic meters, the lowest level since April 2007, according to customs data distributed by e- mail Friday.

Gazprom earnings have been shrinking as most of its export contracts are linked to oil with a lag of six to nine months. Brent crude slumped 48 percent last year on global oversupply.

“The half-year results confirm that this year would be disastrous for Gazprom’s revenue,” said Maxim Moshkov, a UBS Group AG energy analyst in Moscow. The company’s export sales this year may drop to the lowest in a decade in dollar terms, he said.

Sliding gas sales to Russia’s former Soviet allies, mostly because of clashes with Ukraine, is inflicting additional damage. Shipments to the region dropped 35 percent in the first half of this year, compared with the same periods in 2014, the customs statistics showed.

Gazprom faces record-low output this year on weaker demand in Russia and Ukraine, the Economy Ministry predicted last month. Gazprom declined to comment on exports.

The slump is a boon for Gazprom’s position in Europe. Germany, the company’s biggest foreign market, is importing almost all of its gas from Russia now, which is “indeed an unprecedented situation,” Marex Spectron Group Ltd. said in a July 29 note. The price at the border with Germany slid 31 percent to $263 in June, according to Russia’s Economy Ministry.

Russia, struggling with its first recession in six years, gets about 12 percent of its export revenue from natural gas. That amount dropped 35 percent to $22 billion in the six months through June, according to customs.

First-half gas prices for all of Gazprom’s export clients in Eurasia averaged $245, a 27 percent decline from a year ago, the data showed. The customs data usually differ from the company’s statistics by no more than 5 percent. The Federal Customs Service doesn’t count volumes sent to the EU and Turkey if the gas is exported duty-free.