European gas prices again top $1,500/1,000 cubic meters on back of weak winds, upcoming cold spell; Gazprom requests 42.4 mcm for transit via Ukraine
MOSCOW. Dec 7 (Interfax) - Weak winds and forecasts for increasingly harsh winter temperatures have returned European gas prices to over $1,500 per thousand cubic meters following last week's correction.
Gazprom's request for pumping Russian gas through Ukraine has not changed markedly 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, 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 December 7, 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. 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
Declining wind-power generation and forecasts for more severe weather in Europe are driving up gas prices globally.
The day-ahead contract for today at the Dutch TTF gas hub in the Netherlands closed at $1,512 per thousand cubic meters, up 3%, and the January futures contract at the TTF is $1,529.
In Asia, the most expensive winter futures contract for February on the JKM Platts index is now $1,302 per thousand cubic meters on the heels of European prices.
Wind turbines have generated 9.55% of the EU's electricity on average this week following 10% on average last week, according to data from WindEurope.
Germany's Federal Network Agency (Bundesnetzagentur) has changed its assessment of the weather situation in the country from "tense" to "critical". The Bundesnetzagentur considers the situation as "stable" when the average temperature forecast for the upcoming seven days is higher than the average for 2018-2021. The situation is "tense" when the average temperature for the upcoming seven days is zero to two degrees Celsius below the average; and the situation is "critical" when the average temperature is lower than two degrees Celsius below the average, the agency noted.
The forecast for the week is 2.38 degrees below the average for the past four years, thus significantly higher consumption should be expected, Bundesnetzagentur warns.
The Nord Stream pipeline has been fully shut down owing to a number of sanctions-related problems regarding equipment maintenance. At the end of September, two lines of Nord Stream 1 and one line of Nord Stream 2 ruptured near the Danish island of Bornholm.
EUROPEAN INVENTORIES
Europe has begun withdrawing gas from its UGS facilities intensively, and inventories in storage facilities are currently 90.93%, a figure that is 10.9 percentage points above the average indicator for the past five years.
Reserves "thinned" about 0.35 percentage point during the gas day on December 5.
The beginning of offtake season on November 14 this year was the latest since Gas Infrastructure Europe began monitoring in 2011, with the previous latest date coming on November 4, 2013.
However, Gazprom has also warned that, "The load on UGS facilities in Europe will be higher than in previous years owing to the changed logistics and sources of gas supplies to the European market."
European LNG-receiving terminals have been operating at an average capacity-utilization of 70% since the beginning of December against an average of 69% in November.
U.S. INVENTORIES
The state of gas in UGS facilities in the United States is of increasing importance for the global market, and the country is actively increasing gas exports, primarily to Europe, while production is rising at a slower pace.
The U.S. has joined Europe in withdrawing gas from its UGS facilities. The latest reporting week ending November 25 saw 2.3 billion cubic meters of gas extracted from UGS facilities, significantly exceeding the usual rates for this time of year.
The current level of inventory is around 72%, which is just 2% lower than average for the past five years; nevertheless, the figure is substantially lower than inventories at UGS facilities in Europe and in Russia, according to the U.S. Energy Department's Energy Information Administration.
The EIA currently expects UGS stocks to drop by 60 billion cubic meters this winter to the average for the last five years. Natural gas volumes in storage facilities should total 40 bcm by the end of March, which would be 8% below the average for five years.