16 Aug 2022 13:57

Asia, Europe send gas price soaring, Gazprom transit request via Ukraine 42.2 mcm

MOSCOW. Aug 16 (Interfax) - Gas prices in Europe have soared on the back of prices in Asia. Autumn is approaching, setting the global price spiral in motion - prices in Europe are triggering growth in Asia, and are then spiking even more at they try to remain competitive. Europe has restricted its own access and it trying to find salvation in the market for LNG, making this as scarce as possible.

The request for transit of Russian gas through Ukraine on Tuesday was little changed from previous days and months.

Ukrainian transit

Gas Transport System Operator of Ukraine or GTSOU has accepted a request from Gazprom for Tuesday to transport 42.2 million cubic meters of gas through the country, up from 41.9 mcm on Monday, data from GTSOU show.

Capacity was requested only through one of two entry points into Ukraine's Gas Transport System, the Sudzha metering station. A request was not accepted through 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 mcm on August 16, with booking via the Sokhranivka metering station declined," Gazprom spokesman Sergei Kupriyanov told reporters.

GTSOU declared a force majeure in regard to accepting gas for transit through Sokhranivka, claiming that it cannot control the Novopskov compressor station. Ukraine also said that if gas continued to be fed from Russia to the Sokhranivka station, amounts would be reduced accordingly at the exit points from Ukraine's gas transport system. The route through Sokhranivka provided transit of more than 30 mcm of gas per day.

Gazprom believes there are no grounds for force majeure or obstacles to continuing to operations as before.

European market

Spot prices for gas in Europe with Nord Stream compressors out of action have risen to $2,279 per 1,000 cubic meters for the TTF day-ahead contract. The eptember TTF ICE Futures contract reached $2,464 on Tuesday morning.

Prices in Asia are rising on the back of prices in Europe. The most expensive January futures on the JKM Platts index, which reflects spot market prices for gas delivered to Japan, South Korea, China and Taiwan, have reached $2,157. Prices in Asia rose on Monday evening after they jumped in Europe.

Pumping via the Nord Stream pipeline from Russia to Europe fell has fallen to 33 mcm per day. At full capacity, the pipeline can pump up to 167 mcm of gas per day, but capacity has been falling due to disruptions in the maintenance schedule for compressor equipment at the Portovaya compressor station that feeds the pipeline. It has gas pumping turbines from Rolls-Royce, whose gas turbine business was subsequently acquired by Germany's Siemens.

The delays are due to sanctions that Canada imposed against Gazprom, as a result of which one turbine was not returned to Russia on time from Siemens Energy's service center in Montreal. Meanwhile, the time has come for maintenance on other turbines, both due to them reaching the end of their operating period between repairs and due to breakdowns.

Some capacity of the Norwegian Troll field and the Kollsnes gas treatment unit will be shut down for annual maintenance from August 13 until the end of the month. Production capacity will decrease by 20 mcm of gas.

Wind plants generated 9.5% of the EU's electricity on Monday and 9.7% in the past week, data from WindEurope show.

LNG regasification terminals in Europe have been operating at 62% capacity in August, compared to July's average of 69%, according to Gas Infrastructure Europe data. This was primarily due to the shutdown of the large Adriatic LNG terminal in Italy for almost the whole month. As a result, Italy's LNG imports have fallen more than twofold compared to July levels. Average daily supply from LNG terminals in August is down 11% month-on-month.

A new challenge awaits Europe's diversified gas supply. The hurricane season, usually peaking between mid-August and mid-November, is about to begin in the Gulf of Mexico, which could limit the ability to export American LNG.

Gas stocks

Europe continues to inject gas into underground gas storage facilities. Data about the state of UGS, levels in which are now regulated by the law, have become one of the most important economic and political indicators for Europe, reflecting EU leaders' ability to ensure energy security.

UGS gas stocks now stand at 74.73%, up just 0.37 percentage points from the last reporting date, August 14, according to Gas Infrastructure Europe data. However it is usually possible to inject more gas at a weekend.

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 2022 offtake season and increase to 90% in subsequent years.

As for the U.S., extensive gas exports are reducing resources available for pumping as into storage facilities there. This factor is supporting prices in the U.S. domestic market. The current level of gas reserves in UGS facilities is only 5.88% above the five-year minimum. This gap is only narrowing during this summer's injection season, according to the U.S. Energy Department's Energy Information Administration. Current inventory lags 12% behind the five-year average. The situation with filling UGS facilities has improved slightly due to a halt in exports through the Freeport LNG terminal following an accident.