"Gazprom may lose some of its market share or profit margin in Europe in the medium term, but the severity of the losses will depend on how accommodating the company is to the European off-takers' needs. Gazprom's low production and transportation costs estimated at USD3/mmbtu and significant spare production capacity will help it overcome the pressures," Fitch said in a statement, announcing the release of its report on the mid-term European gas market outlook.
Gazprom is expected to counter the pressures by de-linking gas prices from oil prices, which have plunged even more dramatically than the former, as well as improving the conditions in offers to its European customers, including lower volumes for take-or-pay contract and removing destinations clauses restricting deliveries, according to the agency.
The liquefied natural gas (LNG) market is likely to remain oversupplied until at least 2021, the statement said, adding that demand is also expected to remain weak in the Asia-Pacific region, while the European market is also set to become more competitive.
Fitch currently rates Gazprom at BBB- rating with a negative outlook. In June, the agency said that Russian oil and gas companies would be able to keep a stable level of ruble-denominated capital investments for the next several years.
Gas prices fell by around 50 percent between early 2014 and 2016, driven by a glut in the energy market and the fall in commodity prices across the board.
