Spot price for gas in Europe falls to half of nearest futures contract, Gazprom transit request via Ukraine 42.4 mln cubic meters
MOSCOW. Oct 5 (Interfax) - An unusual situation has unfolded in the European gas market: the spot price of gas has fallen below $1,000 per thousand cubic meters now that most countries have filled gas storage facilities to the targeted 80% level. At the same time, gas futures, starting with the nearest, November contract, are approaching $2,000 per thousand cubic meters.
The gas price in Europe was below $1,000 in early June. It was then that the EU adopted a regulation concerning mandatory levels of gas inventories. The spot price has now fallen back to its June levels on the day Austria, one of the last major gas consumers in the EU, reached the stipulated level, although Hungary and Bulgaria have yet to do so.
At the same time the pace at which gas is being injected into storage and at which gas is being taken from the market has hardly altered in the past month.
Gazprom's request for pumping Russian gas through Ukraine has not changed from the previous days and months.
Ukrainian transit
The Gas Transport System Operator of Ukraine, or GTSOU, has accepted a booking from Gazprom today to transport 42.4 million cubic meters of gas through the country against 41.1 mcm the previous gas day, 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 Sokhranovka 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 42.4 mcm on October 5, with booking via the Sokhranovka metering station declined," Gazprom spokesman Sergei Kupriyanov told reporters.
GTSOU has declared a force majeure with respect to acceptance of gas for transit through Sokhranovka, claiming that it cannot control the Novopskov compressor station. Ukraine has also said that if gas continued to be fed from Russia to the Sokhranovka station, amounts would be reduced accordingly at the exit points from Ukraine's gas transport system. The route through Sokhranovka had provided transit of more than 30 mcm of gas per day.
Gazprom believes there are no grounds for the force majeure or obstacles to continuing operations as before.
European market
An Indian summer and light winds are lowering gas prices in Europe, where the spot price is at its lowest since June. The day-ahead contract at the TTF hub in the Netherlands closed at $856 per thousand cubic meters, the November futures contract at $1,749 and February contract at $1,890. In Asia, the most expensive winter futures contract for January on the JKM Platts index is now $1,492.
Wind turbines generated 13.9% of the EU's electricity on Tuesday and 19% on average last week, according to data from WindEurope.
The Nord Stream pipeline is completely shut down due to problems with equipment maintenance caused by sanctions. In addition, last week two strings of Nord Stream 1 and one of Nord Stream 2 depressurized near the Danish island of Bornholm.
European liquefied natural gas terminals operated at an average of 59% of capacity in September, as in August, data from Gas Infrastructure Europe indicate. The data reflect gas received from the EemsEnergy LNG floating regasification terminal in the Netherlands since September 16.
European gas inventories
Europe continues to inject gas into underground gas storage facilities, with the average level of reserves reaching the targeted 80% at the end of August, since when the pace of injection has slowed.
Inventories in UGS facilities have risen to 89.61%, up 0.25 percentage points from October 3, the last reporting date, according to Gas Infrastructure Europe data.
Gas inventories in UGS facilities have currently exceeded 80% in Austria, Belgium, the Czech Republic, Croatia, Denmark, France, Germany, Italy, the Netherlands, Poland, Portugal, and Spain.
Bulgaria, Hungary, and Latvia are lagging. It should take Bulgaria another week to ten days and Hungary another three weeks to reach the 80% target.
Gas stocks at the Incukalns UGS facility in Latvia are the lowest in the EU and are stuck at around 53%. This UGS facility is responsible for reserve gas supplies to Estonia, Latvia and Lithuania, as well as Finland.
U.S. inventories
Households in the U.S. have stopped using air conditioning, and there is no immediate demand for heating, thereby allowing more gas to be injected into UGS facilities. UGS facilities are full because Freeport LNG terminal has ceased exports following an accident. Also in September-October, the Cove Point plant with a capacity of 5.25 million tonnes per year will stop for scheduled repairs for 17 days, and the volumes exported through it will also remain on the domestic market. Repairs are also scheduled at other LNG plants.
The rate of injection increased during the last reporting week, with 2.9 bcm stored, as in the previous week.
The current inventory level is around 74%, which is substantially below inventory at UGS facilities in Europe, with the EU having topped this level a month and a half ago; and in Russia, which has over 90%.
UGS inventories in the U.S. are now only 6.5% above the five-year minimum, according to the U.S. Energy Department's Energy Information Administration. Current inventory lags 9% behind the five-year average.
