Gas inventories in European UGS facilities decline below two thirds of capacity, Gazprom requests 31 mcm for transit via Ukraine
MOSCOW. Feb 13 (Interfax) - Gas inventories in European underground gas storage (UGS) facilities have fallen below two thirds of their capacity after the recent cold weather spell.
A period of warmer weather is expected going forward, but the timeframe and range of this period is precisely in line with multi-year seasonal trends.
Despite changes in weather, rather mild winds are expected in the coming days, which will reduce opportunities for wind generation.
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 13, 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.
Wind power generation in Europe continues to decline. Last week, it provided only 15% of the region's electricity needs, down from an average of 21% during the week of January 30 to February 5, according to WindEurope. On Sunday, wind generation contributed 14.3% of the energy balance (against a backdrop of declining energy demand over the weekend). The weather forecast for the next three days promises low-wind and even calm weather, which will reduce wind generation opportunities.
The day-ahead contract for today at the Dutch TTF gas hub in the Netherlands recovered to above $600, closing at $605 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 $642 per thousand cubic meters, and futures under the LNG North-West Europe Marker are $586 per thousand cubic meters.
Current inventory levels in Europe's UGS facilities have declined to 66.5%, which is 20 percentage points above the average for the same date over the past five years, according to Gas Infrastructure Europe.
Inventories contracted 0.4 percentage point during the gas day for February 11. On weekends, gas consumption declines naturally due to reduced industrial demand, and hence gas consumption from UGS facilities is also reduced. Prior to that, gas offtake for five days in a row was significantly higher than the usual values for this time (the average for similar dates over the previous five years).
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 declining greatly, implying that the inflow of new LNG shipments to the region is falling amid low prices and competition from Asia.
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 6.1 billion cubic meters for the latest reporting week ending February 3. For the first time this year, weekly offtake outpaced the five-year average for this time of year.
The current level of inventories is around 49%, 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.
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 its restart following an accident, and gas that was expected to be exported remains on the domestic market.
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.