Russian Gas Exports to EU Just Hit a New Summertime Record

(Bloomberg) -- Russia’s natural gas flows to the European Union rose to a record for the time of year as the nation starts talks with its former Soviet ally, Ukraine, on shipments to the 28-nation block beyond 2019.

Supplies averaged 513 million cubic meters (18 billion cubic feet) a day in the first two weeks of July, up more than 5 percent from a year earlier, according to Bloomberg calculations based on Gazprom PJSC data released late Monday. The exporter’s executives are in Berlin Tuesday for European Commission-mediated talks on gas transit through Ukraine from next year.

Russian Gas Exports to EU Just Hit a New Summertime Record

Gazprom, which supplies more than a third of Europe’s gas, plans to beat last year’s record supplies to the region and expand its market share in years to come as EU domestic output falls. The Kremlin-backed energy giant aims to cut its dependence on Ukraine, through which almost half of Russia’s fuel now flows, by starting new export pipelines through the Baltic and the Black Seas by the end of next year.

Ukraine has argued that Russia can’t manage without its Soviet-era pipeline network, especially given the risks of U.S.-led sanctions on the Gazprom projects. Another issue is annual maintenance at pipelines that require gas flows to be rerouted, such as the works on the Gazprom-run Nord Stream link to Germany that started on Tuesday.

The Moscow-based exporter and its Kiev-based counterpart, NJSC Naftogaz of Ukraine, have been in dispute over transit fees and pricing for years, after in 2009 signing a gas-shipment contract that expires next year. The Berlin talks are seen as a first round in a series of meetings to negotiate future cooperation.

©2018 Bloomberg L.P.