20 Apr 2022 11:46

Gazprom normally supplying gas for export, transit request via Ukraine for Wed on par with recent days

MOSCOW. April 20 (Interfax) - The European gas sector is adjusting to the change of season, with the continued onset of warmer spring weather and decline of prices on the spot market leading to reduced offtake of Russian gas by importers.

"Gazprom is delivering Russian gas for transit through Ukrainian territory normally, in line with orders from European customers - 56 million cubic meters for April 20," the Russian gas giant's spokesman Sergei Kupriyanov told reporters.

Data from Ukraine's Gas Transport System Operator also show that the nomination for pumping Russian gas to the region for Wednesday is 56 mcm, compared to 55.8 mcm for April 19.

The situation with wind power generation in Europe has deteriorated due to clear, calm weather. Wind power contributed only 13% of electricity generation across the European Union in the week from April 11 to 17, and the dropped to 12.6% on Monday and to 11.4% on Tuesday, data from WindEurope show.

Warmer weather and the seasonal decrease in gas consumption are enabling importers to return to flexible optimization of requested volumes depending 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 $1,003.

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 April 7. The reverse flow from Germany to Poland was 0.6 mcm per hour on Wednesday, 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.

Europe has opened the season of gas injection into underground gas storage facilities, in which reserves now amount to 29.13%, up by 0.36 percentage points from a day earlier. Current reserves in underground gas storage in Europe are 7 percentage points lower than the five-year average. 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.