20 May 2022 14:19

Gas transit request via Ukraine on Fri down to 62 mcm

MOSCOW. May 20 (Interfax) - Ukraine's Gas Transport System Operator (OGTSU) has accepted a request from Gazprom for Friday to transport 62 million cubic meters of gas through the country, down from 63.2 mcm on Thursday, data from OGTSU show.

At the same time, the Ukrainian operator reports that it received a request from Gazprom for transit of gas on Friday totaling 63.7 million cubic meters.

The capacity was requested only through one of two entry points into Ukraine's Gas Transport System, the Sudzha metering station. A request was not being accepted through the Sokhranovka metering station.

"Gazprom is feeding Russian gas for transit through Ukraine's territory in the amount confirmed by the Ukrainian side through the Sudzha gas metering station - 62.4 mcm for May 20. The request for the Sokhranovka gas metering station was declined," Gazprom spokesman Sergei Kupriyanov told reporters.

OGTSU declared a force majeure in regard to accepting gas for transit through Sokhranovka, citing the fact that it cannot control the Novopskov compressor station.

Gazprom believes there are no grounds for a force majeure or obstacles to continuing to operations as usual. Ukrainian specialists worked smoothly at the Sokhranovka and Novopskov stations all this time and continue to do so; transit through Sokhranovka was ensured in full, and there were and are no complaints from counterparties, the Russian gas giant has said.

European Market

As prices decrease on the market, Europe's liquefied natural gas (LNG) imports are beginning to fall somewhat in May from the record high of April, when the European gas transport system took in 10.651 billion cubic meters or 355 mcm per day from LNG terminals. As of the last reporting date, May 17, use of regasification capacity at European terminals was at 67%, which is far from the peak of 77% at the end of April.

The region is continuing to inject gas into underground gas storage (UGS) facilities, reserves in which now stand at 41.23%, up by 0.34 percentage points from a day earlier, data from Gas Infrastructure Europe show. Reserves in Europe's UGS currently lag 3.4 percentage points behind the five-year average.

Injection into UGS in April was slowed by high prices for imported gas, but in May imports from Russia increased and the pace increased. In the first 17 days of May, the pace of gas injection into UGS exceeded the five-year average by 43%, compared to just 12% in April.

Europe imposed tight regulation of the use of UGS this year. Reserves are supposed to be at least 80% of UGS capacity by the start of the offtake season in 2022 and subsequently increase to 90%. However, European Union officials continue to oppose Russia's new conditions for paying for gas. This could lead to the suspension of supplies to other countries as has already happened with Poland and Bulgaria, and makes it harder to fulfil this directive.

Wind power contributed almost 17% of electricity generation across the European Union in the week from May 9 to 15. The figure dropped to 12% in the first three days of the new week, data from WindEurope show.

New payment system

President Vladimir Putin signed a decree (No. 172) on March 31 on a "special procedure for foreign buyers' fulfilment of obligations to Russian suppliers of natural gas," under which payment for Russian pipeline gas supplied after April 1 to foreign counterparties specified in the decree must be made only in rubles.

Under this procedure, special "K" type ruble and foreign currency accounts are opened at the authorized financial institution, Gazprombank (GPB) , for foreign buyers. These accounts prohibit the suspension of transactions, freezing or debit of funds as part of foreign buyer's fulfillment of obligations that are not related to payment on contracts to supply natural gas. Foreign buyers pay for gas in the currency of the contract, which the bank then sells on the Moscow Exchange and transfers rubles to Gazprom . This is the point at which payment for the gas is considered to be completed.

If this condition is not met, gas supplies will be suspended. Further gas supplies are prohibited if the payment deadline for gas supplied under a contract has expired but the foreign buyer did not make the payment or made it in foreign currency, not in the full amount or not to the account at the authorized bank.

Russia has already suspended gas supplies to Poland and Bulgaria because they refused to comply with the new payment system.