Gazprom to remain largest gas supplier to Europe

Oil&Gas Materials 18 November 2021 17:37 (UTC +04:00)

BAKU, Azerbaijan, Nov.18

By Leman Zeynalova – Trend:

Russia’s Gazprom will remain the largest gas supplier to Europe, its key market, despite competition from renewable energy sources in the medium term, Trend reports with reference to Fitch Ratings.

“Gazprom's financial profile has improved from 2020, driven by a robust recovery on the gas markets that will support the profitability of gas exports into 2022. We expect its funds from operations (FFO) net leverage to remain within 2x, if the company adheres to its financial targets while making its investment and dividend-distribution decisions,” the rating agency said in its recent report.

The report says that Gazprom's strong competitive position in Europe is supported by low production cost, enormous gas reserves, and long-term contracts with take-or-pay provisions, which are, however, likely to become less prominent as legacy contracts expire.

“We believe the company may continue providing concessions to customers to compete with the growing LNG industry, including a higher share of hub pricing and selectively relaxing take-or-pay obligations,” said Fitch.

Gazprom is a global energy company focused on geological exploration, production, transportation, storage, processing and sales of gas, gas condensate and oil, sales of gas as a vehicle fuel, as well as generation and marketing of heat and electric power.


Follow the author on Twitter: @Lyaman_Zeyn