Europe again taking gas out of storage as Christmas holidays end; Gazprom requests 42.4 mcm for transit via Ukraine
MOSCOW. Dec 29 (Interfax) -The Christmas holidays in Europe and the region is again taking gas out of storage, despite the mild weather.
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, as on Wednesday, 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 29, 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 that there are no grounds for the force majeure or obstacles to continuing operations as before.
EUROPEAN MARKET
A thaw in Europe and the Christmas holidays had caused gas prices there to fall, but they are now rising again as those countries go back to work. The day-ahead contract at the Dutch TTF gas hub in the Netherlands closed at $844 per thousand cubic meters and the January contract at $919.
Asian prices are also correcting down somewhat, but are holding above prices in Europe. In Asia, the most expensive winter futures contract for February on the JKM Platts index is now $1,018 per thousand cubic meters on the heels of European prices.
Power generation from wind turbines in Europe averaged at 21% last week, and 28% in the first three days of this week, according to data from WindEurope.
EUROPEAN INVENTORIES
European inventories in underground gas storage (UGS) facilities are currently 83.18%, or 11.7 percentage points above the five-year average, according to Gas Infrastructure Europe (GIE).
Inventories fell 0.03 percentage points during the gas day on December 27, after rising for three straight days.
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 terminals have been operating at an average capacity-utilization of 68% since the beginning of December, as in November. LNG inventories at terminals have been declining at 10% below the November average, implying that new shipments of LNG have been arriving to Europe more slowly than the market is consuming.
Germany opened the Wilhelmshaven LNG terminal, its first, on December 17. Gas has been supplied to the system from the terminal since December 21.
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 December 16 saw 2.5 billion cubic meters of gas extracted from UGS facilities. The current level of inventories is around 69%, which is just lower than average for the past five years; nevertheless, according to the U.S. Energy Department's Energy Information Administration.
Some regions of the U.S. have bene hit by severely cold weather and blizzards, and S&P Global reckons offtake could have more than doubled to 5.7 billion bcm in the week ending December 23.
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.