Was Gazprom drowning in gas this summer?

Gazprom is flaring gas next to the inlet of the shut-off Nord Stream. Is it the last resort to dispose of the unsold gas?

Since June 2022 Gazprom has been gradually curtailing gas supplies to Europe through the Nord Stream pipeline due to supposed technical issues at the Portovaya compressor station next to the Russian-Finnish border. At the beginning of July, a huge flare appeared close to this compressor station. Soon there were many speculations that Gazprom had to burn the gas initially destined for Europe, as it could not sell it domestically and could not stop production, as well as many theories on the future of the Russian gas industry, based on this assumption. Was it really the case, or there might be some other reasons?

However, it is quite common, if not routine for Gazprom to raise and lower its production volumes within a year with usual winter daily production 60% higher than in the summer.

So what might be the problem this time? After all, the full Nord Stream load is less than 10% of the total Gazprom production, at the beginning of June it was working at 40% capacity and that was later halved, so at each step, Gazprom would have to deal with 2% reduction of its total production volume.

How much was burning? According to Rystad, a reputable industry consultancy, Gazprom burnt 4.3 mln. m3 of gas daily. However, send-out reduction steps at Nord Stream were 33 mln. m3 per day. It would be odd to be able to deal with 62 mln. m3 per day but have to burn 5% of it next to the Finnish border, causing an uproar. If anything, these volumes would probably be flared at the wellhead in Siberia.

There might be a more plausible explanation. Gazprom has been building an eponymous mid-size LNG plant next to the Portovaya compressor station, and the project is coming to completion. Plant nameplate capacity is 1.5 MTPA, or an equivalent of 2 bln. m3 per annum, or 5.4 mln. m3 daily

During start-up and commissioning LNG plants put through gas through various systems to check everything, and also to cool the system down. In the process, the plant starts to produce gas, initially at the gaseous phase, but already off-spec for a pipeline, and later at the liquid phase, but still off-spec for tanker loading, so-called “warm LNG”. Some of this gas has to be burned, and some can be captured and reused, but this is somewhat costly. On the other hand, the gas has no value for Gazprom at the moment, as it sits on a huge idle capacity. From the cost-conscious engineer’s standpoint, the easiest thing is to just flare the gas, despite all the complaints from the environmental and PR departments. In the last decade, Russia has been introducing increasingly harsh fines for flaring, but there are generous exemptions for project start-up periods and Gazprom is probably not concerned anymore about its ESG profile and carbon footprint. So, as there are convenience reasons to flare and no particular reasons not to flare, the gas goes up in flames. Incidentally, the flared volume is 80% of the plant capacity, which adds plausibility to this hypothesis.

This is not business as usual for the global gas industry, the common duration of the start-up flaring is 2-3 weeks, not 2 months, and the levels are at 40-50% of the capacity, but the likely explanation is some sort of a start-up problem, which caused a delay, and general wantonness towards the environment, rather than any issues with gas production management in the gas fields.