20 Jun 2022 15:13

Europe ramping up transfer of imported LNG to UGS facilities, Gazprom books 41.7 mcm for transit via Ukraine on Monday

MOSCOW. June 20 (Interfax) - The Gas Transmission System Operator of Ukraine (GTSOU) has accepted a booking from Gazprom for Monday to transport 41.7 million cubic meters of gas through the country compared to 41.7 mcm on Sunday, GTSOU data indicate, with capacity pumping through only the Sudzha metering station, one of two entry points into the GTSOU, and no pumping via the Sokhranivka metering station.

"Gazprom is supplying Russian gas for transit through the territory of Ukraine at the volume confirmed by the Ukraine side via the Sudzha metering station at 41.7 million cubic meters on June 20, with no booking via the Sokhranivka metering station," Gazprom spokesman Sergei Kupriyanov told reporters.

The GTSOU has declared a force majeure regarding accepting gas for transit through Sokhranivka, saying that it cannot efficiently control the Novopskov compressor station.

Gazprom believes that there are no grounds for the force majeure nor any obstacles to continuing operations as usual. "Ukrainian specialists have worked regularly at the Sokhranivka metering station and the Novopskov compressor station all this time, and continue to do so. Transit through Sokhranivka has been ensured in full, and there have not been any complaints from counterparties," Gazprom notes.

Kyiv has proposed transferring transit volumes from Sokhranivka to Sudzha, though Gazprom is certain that this is technically impossible, as based on the Russian flow diagram. Moreover, the distribution of volumes is specified in the cooperation agreement dated December 30, 2019.

Meantime, the Ukrainian side insists that payment must still be remitted based on the calculated pumping volume as per the long-term agreement at 109 million cubic meters per day under the "pump-or-pay" principle. Gazprom indicates that the Ukrainian side has reduced the possibility of pumping by one third, while Naftogaz Ukraine declares that it is currently receiving less payment for transit from Gazprom, and that it is preparing an appeal for arbitration.

EUROPEAN MARKET

Spot prices for gas in Europe soared to $1,286 per thousand cubic meters last week amid a reduction in Nord Stream's transit capacity owing to the technical repercussions from Canada's sanctions. They have blocked the maintenance of the pipeline's turbines, resulting in Germany receiving ever-decreasing supplies of gas.

The spot price usually adjusts slightly during the weekend, with a contract price of $1,182 per thousand cubic meters for Monday delivery at the Dutch TTF gas hub.

Europe has ramped up regasification sharply at LNG terminals owing to gas shortages because of the Canadian sanctions. Productivity increased 12% during last week's working days from June 13 to 17 compared to June 6 to 10, with terminals reaching 72% capacity last Wednesday and averaging 63% capacity since the beginning of the month.

Europe remains the premium market for LNG, as prices in Asia remain slightly below those at European hubs. However, the situation could change soon, as China lifts its quarantine restrictions in force in the first half of the year owing to the prevention of the coronavirus, which could affect market capacity in the Asia-Pacific region.

The European region continues to pump gas into underground gas storage (UGS) facilities. Reserves are currently 53.44%, growth of 0.4 percentage points for the past day, according to data from the Gas Infrastructure Europe association, and the current level of stocks in Europe's UGS facilities lags the five-year average by 2.6 percentage points. The European Union has introduced a strict regulation for usage of UGS facilities since the start of the year. Stocks must be at least 80% of the capacity of the UGS facilities by the beginning of the offtake season in 2022, and at least 90% of the capacity in the upcoming years.

Wind-power generation in Europe provided 11.7% of the EU's energy balance last week after 13.7% in the week of June 6-12, according to data from the WindEurope association.