This was caused by a combination of several factors. They were dominated by a warm winter, after which there remained a surplus of gas in underground storage facilities in Europe, a slump in the economy caused by the SARS-CoV-2 coronavirus pandemic, but also a significant increase in the supply of competitive and cheaper liquefied gas (LNG) mainly from the US, Qatar and Africa. The pipeline gas from Norway was also well positioned at Gazprom's expense.
However, Gazprom recorded the biggest, up to seven-fold, slump in exports in Turkey, which has long been the second largest market for Russian gas after Germany. Reuters reports that this led to the shutdown of the Blue Stream pipeline, which has exported roughly 10 to 11 billion cubic meters of gas from Russia across the Black Sea since about 2000.
Turkish state gas company Botas shut it down in mid-May on the grounds that it had to do regular maintenance and has been out of service ever since. Russian pipeline gas Turks massively replace by buying LNG, which is more cost-effective.
The sharp drop in Russian raw material imports also puts Reuters at the fork in the face of growing political disputes between Ankara and Moscow. It recalls the increase in mutual tensions over Syria and Libya, which has recently been coupled with the Turks' decision to turn istanbul's originally Christian Central Temple, Hagia Sofia, from a museum into a mosque.
Russian oil exports to Europe are also at their lows. According to monitoring agency Argus Media, total exports through the Satellite oil pipeline system, as well as through sea terminals, will fall by as much as 25 percent in July compared with June.
While exports through both the northern and southern branches (also pointing to Slovakia) of the Družba oil pipeline will be reduced by only four percent, exports of the Urals export mix via seaports, mainly on the Baltic Sea, will fall by more than 40 percent month-on-month.
This is the result of agreements between the world's largest oil producers OPEC+ organised by Russia and Saudi Arabia. And both countries account for the largest share of the agreed radical reduction in global production of nearly 10 million barrels per day, which occurred in May and June and was extended to July. As Russia did not fully comply with its share of the reduction in May, it must now compensate it in July.
Oil export revenue fell by a third.