1 Nov 2017 14:08

Europe switches from storing gas to withdrawing gas 21 days later than in 2016

MOSCOW. Nov 1 (Interfax) - The withdrawal of gas from underground gas storage facilities in the European Union has begun, according to information from Gas Infrastructure Europe.

Gas withdrawals exceeded gas injections for the first time this fall on October 30, 2017.

There is still the possibility of net withdrawals fluctuating toward net injections in the days ahead, especially over the weekend. However, growth of gas reserves has declined to zero for the first time this season.

The 'u-turn' in reserve growth took place when gas storage levels reached 89.14% of maximum capacity. In 2016 this took place earlier on October 10 at 92% of max capacity and in 2015 on October 13 at 84% max capacity.

The beginning of autumn in Europe has been characterized by quite mild weather, allowing European gas providers to extend the period of gas injections by several days.

In response to the mild weather, prices declined in the middle of October from almost $230 per thousand cubic meters to $200-$210 per thousand cubic meters, along with Russian gas supply volumes. Gazprom's hydrometeorological center has forecast that the upcoming winter in Russia will be quiet mild, and one to two degrees below average in Europe.

Exports of Russian gas to Europe declined significantly in October 2017, breaking a 14-month streak of uninterrupted growth. The decline will be up to 10% following a record-high 17 billion cubic meters (bcm) of gas supplies in October 2016. Gazprom exports in the fall of 2017 caused a spread to form between rising spot prices and contract prices for Gazprom which grow at a slower rate. However, when using a normal base of comparison in October 2015 when 14.6 bcm of gas was supplied, then supplies in October 2017 can in no way be called weak.

Europe will go through its first winter this year without the Rough gas storage plant operating, the United Kingdom's main gas storage plant. As a result of its closure, the majority of gas to the U.K. will come from imported gas pipeline supplies and LNG. The U.K.'s National Balancing Point gas hub, one of the most liquid spot price hubs in Europe, has already seen a new wave of volatility following the closure of the Rough gas storage plant, connected both to excess gas in the summer, as well as a shortage during the earlier than expected cold weather in the fall.

Gas withdrawal from gas storage sites in Russia began in the middle of October.