27 Jan 2023 11:28

European gas prices decline in anticipation of warmer weather next week; Gazprom requests 24.2 mcm for transit via Ukraine

MOSCOW. Jan 27 (Interfax) - Relatively low temperatures and decreased wind generation have not affected European gas prices, which are declining in anticipation of warmer weather next week.

Meantime, consumption from Europe's underground gas storage (UGS) facilities has been exceeding the average for the past five years amid the current seasonable temperatures.


The Gas Transport System Operator of Ukraine, or GTSOU, has accepted a booking from Gazprom today to transport 24.2 million cubic meters of gas through the country, the same as the previous day, data from the 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 24.2 mcm on January 27, with booking via the Sokhranovka metering station declined," Gazprom spokesman Sergei Kupriyanov told reporters.

The 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.


Power generation from wind turbines in Europe has averaged 12% this week, 18% last week, and 29% two weeks ago, according to data from WindEurope.

The day-ahead contract for today at the Dutch TTF gas hub in the Netherlands closed at $630 per thousand cubic meters.

The "Asian premium", or the spread between gas prices in Asia and LNG prices in Europe, is steady. In Asia, the most expensive futures contract for March on the JKM Platts index is $720 per thousand cubic meters, and futures under the LNG North-West Europe Marker are $598 per thousand cubic meters.


Current inventory levels in Europe's underground gas storage facilities have declined to 75.65%, which is 20 percentage points above the average for the same date over the past five years, according to Gas Infrastructure Europe.

Inventories contracted 0.71 percentage point during the gas day for January 25.

However, the relatively mild weather in October and November and thus far in January, in addition to the continent's austerity measures, have resulted in the level of reserves in UGS facilities being at an all-time high for this time of year since monitoring began, thereby underpinning the authorities' confidence in getting through the winter in good shape.

European LNG terminals have been operating at 63% capacity since the beginning of January against an average of 67% in December. January LNG imports are down 5% from December.

Germany has opened its second LNG terminal on the Baltic coast at Lubmin in addition to the terminal at Wilhelmshaven, although the recently opened Eemshaven terminal in the Netherlands has closed at least until the end of January owing to damage to the heating supply system.


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.

Reserves decreased 2.6 billion cubic meters for the latest reporting week ending January 20, 2023. Consumption of inventories has been recovering owing to the normalizing weather, though it is still below the typical level for this time of year.

The current level of inventories is around 57%, which is five percentage points higher than the average figure for the past five years, according to the U.S. Energy Department's Energy Information Administration.

S&P Global forecasts an ongoing increase in offtake to 3.9 bcm for the week through January 26, though this is also much less than the normal figure for this time of year.

The EIA currently expects UGS stocks to drop by 60 bcm 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.