Rain and clouds to cool superheated temperatures in Europe, Gazprom books 42.2 mcm of gas for transit via Ukraine on Tuesday
MOSCOW. June 28 (Interfax) - The Gas Transmission System Operator of Ukraine (GTSOU) has accepted a booking from Gazprom for Tuesday to pump 42.2 million cubic meters of gas through the country compared to 42.1 mcm on Monday, 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 42.2 million cubic meters on June 28, with booking via the Sokhranivka metering station declined," 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
Several days of cooler and cloudy weather with rain are expected in the upcoming days in Europe following Monday's hot temperatures, which should reduce energy consumption for air conditioning.
Wind-power generation in Europe provided 10.6% of the EU's energy balance on Monday, having averaged 10% last week, according to data from the WindEurope association. However, changing weather does not promise a significant increase in wind power, hence generation of European renewable energy.
Spot prices for gas in Europe have risen to $1,406 per thousand cubic meters amid a reduction in Nord Stream's transit capacity owing to the technical repercussions from Canada's sanctions regarding partial blocking of maintenance on the pipeline's turbines, resulting in Germany receiving ever-decreasing supplies of gas. Consequently, August futures in Asia on the JKM Platts spot index have risen to $1,324.
The European region continues to pump gas into underground gas storage (UGS) facilities. Reserves are currently around 57.12%, growth of 0.44 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 1.5 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.
European LNG receiving terminals are operating at an average of 63% capacity in June (57% on June 26) against 65% in May.
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.