Italy overtakes Turkey to become Russia's second biggest gas buyer

Jun 15, 2016 12:00 AM

Italy is now the second biggest buyer of Russian gas in Europe -- overtaking Turkey -- the head of Gazprom said Wednesday.

CEO Alexei Miller said Italian demand for Russian gas continued to rise and was up 5.3% so far in 2016 compared with the same period of last year.

But although volumes to Italy so far this year are up on 2015, the growth has slowed in the second quarter compared with the first.

In addition, Turkish purchases are considerably down this year compared with 2015.

"In 2016, Italian consumers have increased their demand for gas from Russia," Miller said in a short statement.

"Italy is now ahead of one of our biggest consumers -- Turkey -- in terms of the Russian gas volumes purchased in 2016. Currently it is the second biggest consumer of Russian gas among all importing countries," he said.

Germany is the biggest buyer of Russian gas, taking 12 Bcm in Q1.

Italy bought 24.42 Bcm of Russian gas in 2015, the second highest volume in its history, and in Q1 it purchased 6.36 Bcm of Russian gas -- a 28% increase compared with the first three months of 2015.

But despite being the number two buyer, total supply growth over the period January 1-June 15 of 5.3% means a marked slowdown since the start of Q2.

In addition, Turkish purchases of Gazprom gas have fallen sharply so far in 2016.

In Q1, Turkey bought just 6.42 Bcm from Gazprom, a 15% fall on the first three months of last year on continued strained relations between Moscow and Ankara over the downing of a Russian fighter jet in November 2015.

Growth in Gazprom's gas sales to its core foreign markets of Europe and Turkey seems to have stalled over the past two and a half months after a big surge in supplies in the first quarter.

In Q1, sales to Europe and Turkey (but excluding countries of the former Soviet Union) totaled 44.4 Bcm, up from 34.4 Bcm in Q1 2015.

But Miller said in early June that sales to the region as a whole in January-May were up by 10 Bcm, meaning flat sales on the same months of 2015.

The latest data announced Wednesday said total exports to Europe were 10.2 Bcm higher in the period January 1-June 15, meaning a slight increase of just 0.2 Bcm in the past two weeks.

The latest Gazprom data, while not providing absolute volumes, suggest a further drop-off in growth in some of the company's key European markets, such as Germany and the UK.

Miller said gas supplies to Germany to June 15 were up 9.1% compared with 10.4% growth for the first five months of 2016.

In Q1, Gazprom's sales in Germany were up 26.7% to 12.05 Bcm.

Similarly in the UK, which could include volumes sold by Gazprom Marketing & Trading, Miller said sales were up by 80.4% to June 15 compared with 91.5% growth in January-May.

There has also been a slowdown in supplies to Poland and France.

Despite the slowdown in growth, the amount of gas imported by European customers with Gazprom contracts has room to increase in the second half of the year, as pricing under oil-indexed mechanisms is set to fall from current levels.

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