Russia’s natural gas producer Gazprom has increased its exports to Europe by 15 percent since the start of 2016 to 10.2 billion cubic meters of gas, the company’s CEO Alexey Miller said on June 15, 2016. The oversupply of liquefied natural gas (LNG) on the European market in the first five months of 2016 has not affected Gazprom’s position, Kommersant daily calculated by using data from the European gas operators’ network Entsog. LNG deliveries to Europe during this period increased by 20 percent to about 20 million tons.

Gazprom expected competition in Europe because of the new LNG projects launched in Australia and the United States that got access to the market in 2015. However, Gazprom benefits from the record low oil price, which forms the basis of the pricing formulas contained in most of its gas supply contracts.

If the oil price continues to rise, the prices under Gazprom’s contracts will increase, while the spot prices for LNG will remain under pressure due to excess supply, putting LNG in a more favorable position.

On June 14, 2016, Gazprom deputy head Alexander Medvedev said that he does not see LNG imports to Europe from overseas as a serious competitor to the company’s pipeline supplies. Medvedev noted that European consumers have still not received a single tanker of LNG from the United States.

Britain, the Netherlands, France, Italy, Greece, Poland, and Lithuania import LNG and Russian pipeline gas directly. Only Lithuania cut imports of Russian gas by 33 percent year-on-year, while increasing LNG supplies 3.3 times year-on-year. In the Netherlands, which is trying to offset the declining production at the domestic fields, LNG imports fell by 57 percent year-on-year, against the 103.8-percent year-on-year growth of Gazprom’s supplies.

In absolute terms, Italy has outpaced Turkey to become the second-biggest consumer of Gazprom’s gas, according to CEO Miller.

“In 2016, Italian consumers demonstrated an excessive demand for Russian gas, as exports have risen by another 5.3 percent to last year’s record in the period from January 1 to June 15. As a result, Italy has outpaced Turkey in terms of the volume of purchases of Russian gas in 2016, and that country is currently in the second spot in terms of Russian gas imports,” Miller said.