Gazprom daily output hit multiyear low in July on export slump

Gazprom PJSC’s daily gas production plummeted in July to the lowest since at least 2008 as its exports to key markets fell for a fourth consecutive month. 

Russia’s gas giant pumped an average of 774 million cubic meters a day last month, down 14% from June, according to Bloomberg calculations based on data published Monday. Gazprom’s output so far this year is 262.4 billion cubic meters, a decline of 12% from the same period a year ago. The company planned to produce 494.4 billion cubic meters in 2022, down 4% from last year. 

The drop in production follows a significant decline in Gazprom’s deliveries to the European Union, historically its single biggest market, amid the deterioration of Russia’s relations with the West over the war in Ukraine. The company earlier this year cut supplies to several countries, and it has reduced flows on the Nord Stream pipeline to Germany to 20% of capacity, citing maintenance issues with turbines.

European governments and businesses are concerned that Russia may halt gas flows altogether, as the EU looks to prevent the energy crisis from tipping the bloc into recession. 

Gazprom, which doesn’t provide a breakdown of its exports, supplied an average of 206 million cubic meters a day to countries outside the former Soviet Union, in July, Bloomberg calculations show. That’s a drop of about 22% from the June level. It’s also the lowest since at least 2014, even with daily flows to China setting records three times last month. 

The company’s deliveries through Ukraine remain less than 40% of contracted transit volumes after a major cross-border entry point for gas went out of service in mid-May. Meanwhile, Gazprom halted flows via the Yamal-Europe link, which runs through Belarus and Poland to Germany, in May amid counter-sanctions from Russia.

The Russian producer has reiterated that it’s supplying gas in line with confirmed requests from clients. 

Historically, Gazprom has been able to rapidly ramp up production, even after months of contraction, by deploying spare capacity in the event of higher demand.