Nomination to pump gas via Ukraine up to 95 mcm Mon after weekend drop

MOSCOW. April 11 (Interfax) - The European gas sector is adjusting to the change of season, with the continued warmer weather in Europe, growth of power generation from renewable services and drop in spot market prices leading to a decrease importers' offtake of Russian gas.

The nomination for pumping Russian gas to Europe through Ukraine rose to 95 million cubic meters on April 11 from 80.4 mcm on April 10, data from Ukraine's Gas Transport System Operator show.

Warmer weather and the decrease in gas consumption are enabling importers to return to flexible optimization of consumption volumes demanding on price. If imported gas is supplied according to the month ahead exchange index (about have of Gazprom exports are pegged to it), its price in April is about $1,400 per 1,000 cubic meters, while day ahead contracts on the spot market currently cost $1,157.

Therefore, buyers are increasing spot market purchases and reducing offtake on long-term contracts, under which prices are at record highs. This is one of the reasons for the growth of reverse supplies from Germany to Poland through the Yamal-Europe gas pipeline

The Yamal-Europe gas pipeline has been continuously operating in reverse on the section between Germany and Poland since Thursday. The reverse flow from Germany to Poland rose to a substantial 0.7 mcm per hour on Monday, data from gas transport operator Gascade show. Offtake of additional gas from the main European hub to replace direct imports is another factor contributing to high gas prices in the European Union.

With the arrival of rainy and windy weather in Europe, wind power generation in the region improved. Wind power contributed an average of 25% to electricity generation across the EU in the week from April 4 to 10, up from about 16% from March 28 to April 3, data from WindEurope show.

European underground gas storage facilities have seen injection exceed offtake consistently since April 6, and reserves stood at 24.14% as of Monday, up 0.19 percentage points from the previous day. However, injection in April will be curbed by high prices for imported gas.

The Russian presidential decree on the new process for paying for Russian gas supplies, with mandatory conversion of contract currencies into rubles through Gazprombank , went into effect in April. So far, Gazprom's European buyers have generally maintained their previous nominations for gas offtake.