LNG intake, wind generation in EU declining; Gazprom requests 30.8 mcm for transit via Ukraine
MOSCOW. Feb 8 (Interfax) - The level of LNG inflows to Europe since the beginning of February is the lowest since November last year.
Europe has large, unused gas reserves in underground storage facilities owing to reduced industrial demand, though there are persistent signals from China regarding the restoration of business activity following the lunar New Year and the lifting of anti-Covid restrictions.
UKRAINIAN TRANSIT
The Gas Transport System Operator of Ukraine, or GTSOU, has accepted a booking from Gazprom today to transport 30.8 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 30.8 mcm on February 8, 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.
EUROPEAN MARKET
The onset of the cold snap has caused a decline in electricity generation from turbines.
Indeed, power generation from wind turbines in Europe has averaged 11% this week against 21% last week and 14% 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 $617 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 $649 per thousand cubic meters, and futures under the LNG North-West Europe Marker are $594 per thousand cubic meters.
EUROPEAN INVENTORIES
Current inventory levels in Europe's underground gas storage facilities have declined to 69.49%, which is 20 percentage points above the average for the same date over the past five years, according to Gas Infrastructure Europe.
Inventories contracted 0.63 percentage point during the gas day for February 6, which is the highest figure over the past 10 days.
However, the relatively mild weather in October, November and 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 operated at 62% capacity in January, and have averaged 60% in February.
The level of LNG reserves in tanks at receiving terminals has been reducing greatly, implying that the inflow of new LNG shipments to the region is falling amid low prices and competition from Asia.
Germany has opened a second terminal for receiving LNG on the Baltic coast. A terminal at Lubmin has joined the facility in Wilhelmshaven, and the launch of a floating storage regasification unit in Brunsbuttel is being prepared.
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.
Reserves decreased 4.2 billion cubic meters for the latest reporting week ending January 27, 2023, which exceeded the S&P Global outlook of 3.9 bcm. Consumption is still below the typical level for this time of year.
The current level of inventories is around 54%, which is seven percentage points higher than the average figure for the past five years, according to the U.S. Energy Department's Energy Information Administration.
Cold weather is forecast in the U.S. for February, which should result in increased energy costs for heating and increased gas consumption. On the other hand, Freeport LNG, the country's largest LNG plant, is still postponing restart following an accident, and gas remains on the domestic market that has been expected to be exported.
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.