Germany, Belgium switch to offtake from UGS facilities, LNG use peaking, Gazprom books 41.6 mcm of gas for transit via Ukraine on Thursday
MOSCOW. July 14 (Interfax) - Booking for the transit of Russian gas via Ukraine remains at the level of previous days and months, while Europe is weathering the fourth day without Nord Stream gas, with the European Union having reduced injecting gas into underground storage (UGS) facilities to a minimum and Germany and Belgium having switched to offtake from UGS facilities.
UKRAINIAN TRANSIT
The Gas Transmission System Operator of Ukraine (GTSOU) has accepted a booking from Gazprom for Thursday to pump 41.6 million cubic meters of gas through the country compared to 41.3 mcm on Wednesday, 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 41.6 million cubic meters on July 14, 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
An accident at the Norwegian offshore field Sleipner has caused a spike in European gas prices, with output dropping by 17 million cubic meters per day. The Norwegian gas transmission operator has announced that the production capacity of the Nyhamna gas-processing plant has dropped 50%.
Spot prices for gas in Europe are holding at $1,880 per thousand cubic meters while Nord Stream is under maintenance and repair. August futures in Asia on the JKM Platts spot index are trading at $1,400 per thousand cubic meters.
Wind-power generation in Europe has dropped to 9% of the EU's energy balance during the week, having averaged 15% last week, according to data from the WindEurope association.
The European region continues to pump gas into underground gas storage (UGS) facilities. Reserves are currently around 62.57%, growth of 0.23 percentage points for the past day of July 11, 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 1.4 percentage points. Gas injection has dropped to its lowest level since mid-April amid the shutdown of the Nord Stream pipeline for repairs, and Germany and Belgium have switched to offtake from UGS facilities. 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 75% capacity, which is just below the all-time high of 77%. On average, the terminals were operating at 65% capacity in July and at 63% capacity in June. Thus far, the region remains a premium market for LNG, as prices in Asia are slightly below those at European hubs.