European gas prices declining on back of rise in LNG imports; Gazprom requests 42.3 mcm for transit via Ukraine
MOSCOW. Feb 28 (Interfax) - Gas prices in Europe are declining owing to growth in imports of liquefied natural gas, and the spot price in the region is $530 per thousand cubic meters, which is the lowest price since the beginning of November 2022.
UKRAINIAN TRANSIT
The Gas Transport System Operator of Ukraine, or GTSOU, has accepted a booking from Gazprom today to transport 42.2 million cubic meters of gas through the country, and the previous day it was 41.4 mcm of gas, 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 42.3 mcm on February 28, 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 day-ahead contract for today at the Dutch TTF gas hub in the Netherlands closed at $530 per thousand cubic meters.
A split between LNG prices in Asia and those in Europe has noticeably returned. In Asia, the most expensive futures contract for April on the JKM Platts index is $534 per thousand cubic meters, and futures under the LNG North-West Europe Marker are $483 per thousand cubic meters.
Wind turbines provided 16% of the region's electricity needs last week, and the figure was virtually the same on Monday at 15.7%, according to WindEurope.
EUROPEAN INVENTORIES
Current inventory levels in Europe's underground gas storage (UGS) facilities have declined to 62.14%, which is 22 percentage points above the average for the same date over the past five years, according to Gas Infrastructure Europe.
Inventories contracted 0.29 percentage point during the gas day for February 26.
The relatively mild weather in October, November and January, in addition to the continent's austerity measures, have resulted in the level of inventories 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 63% since the beginning of February.
Meantime, there has been an increase in regasification volumes since the middle of last week, mainly in France and Poland.
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.
Inventories decreased 2 billion cubic meters for the latest reporting week ending February 17, 2023, which is 60% less than the usual offtake for this time of the year.
The current level of inventories is around 46%, which is 15 percentage points higher than the average figure for the past five years, according to the U.S. Energy Department's Energy Information Administration. The current level of inventories is close to the highest figure for the past five years.
Freeport LNG, the United States' largest LNG plant, has announced reopening two of its three liquefaction lines, thereby reducing the excess gas on the U.S. market and boosting supplies of LNG to the global 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.