Gazprom PJSC increased its 2021 price guidance for natural gas exports, while signaling caution on volumes it could ship, as Europe’s energy crisis worsens.

The Russian gas giant, Europe’s biggest supplier of the fuel, reiterated that shoring up inventories at home was its top priority. Only after it has refilled its own storage facilities by the end of October, would the company look at potentially increasing exports to continental Europe, Wood & Co. and BCS Global Markets wrote in separate notes Friday following a webinar with Gazprom managers. 

Gazprom increased its full-year gas-price guidance for exports to Europe and Turkey to a range of $295 to $330 per 1,000 cubic meters, wrote Ildar Davletshin, head of Russian research at Wood & Co. Mitch Jennings, a senior analyst in Moscow-based Sova Capital, also outlined the same price range. The revised outlook on Gazprom’s average prices in the region is good news for the company’s investors as it signals higher dividends may be coming.  

Both Wood & Co. and Sova Capital also say that Gazprom is sticking with its conservative estimate of full-year gas supplies to Europe and Turkey, which is seen at 183 billion cubic meters. 

Gazprom didn’t immediately respond to a Bloomberg request for a comment sent outside normal business hours.

Supply Caution

The energy crisis sweeping Europe, due to scarce supply exhausted by rebounding demand, threatens to hamper the region’s economic recovery by driving up business costs and household bills and sending inflation soaring. As a result, Gazprom’s caution on shipments may disappoint some traders and policy makers hoping for an immediate hike in supply. 

Russian President Vladimir Putin suggested on Wednesday that exports from the country to Europe could hit a record in 2021, but wouldn’t specify precise volumes or when the ramp-up may start. 

It’s not unusual for Gazprom to offer a cautious supply outlook, due to the fact that its sales are highly dependent on the weather, both in Russia and abroad. However, the company has taken pains to reiterate in recent days that it is fulfilling all its contractual obligations and it will aim to boost exports whenever possible. 

The analysts say that Gazprom sees longer-term contracts and longer-dated prices as a tool that would help Europe mitigate the impact of extreme volatility. 

Sova Capital’s Jennings said the company may consider a return to indexing gas price to oil in certain contracts “as offtakers might want less volatility in pricing.” 

Meanwhile, Europe’s gas rally is already signaling a record-high dividend for Gazprom. Earlier this year, BCS forecast the gas giant’s 2021 payouts may exceed 40 rubles (56 cents) per share, more than double the previous record-high dividends in 2018.