The price Europe pays for Russian gas fell to its lowest level in 15 years, according to Russian national gas company Gazprom’s accounts, released on December 3.

In the third quarter the average price per thousand cubic meters, taking into account excise tax and customs duties, amounted to $169.8. A year ago, during the same period, it exceeded $250. That is equivalent to a fall of a third (32%).

Prior to this result the last time gas was so cheap was in 2004 when gas cost $137.7, but the price rose again in 2005 to over $190.

The reason for the low price was is an excess of supply on the market, caused by rising competition from LNG. The cost of LNG in Asia has halved after producers began sending excess LNG to Europe.

As bne IntelliNews reported, Gazprom posted a 45% year-on-year decline in net profit under IFRS in 3Q19 to RUB212bn ($3.3bn), attributed to the decline in export deliveries and lower gas prices in Europe. Gazprom saw total sales decline to RUB1.6 trillion in the reporting quarter versus RUB1.9 trillion for the same quarter of 2019. Exports to European and non-CIS sales were down by 37% y/y, with prices of natural gas averaging to $169.8 per 1,000 cubic metres from $250.8 last year.

The company was only able to partially compensate for the losses by raising prices in the domestic market and for neighbouring countries.

Nevertheless, Gazprom was supported by the 5% q/q higher top line of its oil subsidiary Gazprom Neft thanks to strong downstream (refining) performance. Another boost came from the $1.1bn revaluation gain associated with the recent treasury stock sales, which brought Gazprom's net profit in line with expectations.