Unions halting operations at all LNG terminals in France; Gazprom requests 42.4 mcm for transit via Ukraine
MOSCOW. March 7 (Interfax) - Unions have begun halting operations at all four LNG terminals in France in order to protest pension reform in the country, with three Elengy facilities ceasing operations for a week, and the Fluxys terminal shutting down for two days, according to the local press.
France is Europe's largest buyer and receiver of LNG at 27% of all imports to the region. The country's terminals sent 117 million cubic meters of gas per day to the transmission system during the first five days of March.
Extracting gas from underground gas storage (UGS) facilities could theoretically offset the shutdown at the receiving terminals, as technical capacities allow for possibly covering the decreased volumes. However, France currently has some of the lowest reserves in UGS facilities at below 38%, with only Latvia having fewer reserves in Europe.
Gas flows from neighboring countries could also offset the shortage in the system, though this would likely affect prices on the spot market.
Moreover, the Interconnector gas pipeline halted operations this past weekend resulting from a breakdown in equipment at the LNG terminal in Bacton, UK.
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, and the figure was 41.5 mcm of gas 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 42.4 mcm on March 7, 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 $484 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 $510 per thousand cubic meters, and futures under the LNG North-West Europe Marker are $471 per thousand cubic meters.
Wind turbines provided 13% of the region's electricity needs last week, dipping to 10.8% on Monday, and the figure was 16% two weeks ago, according to WindEurope.
The Interconnector gas pipeline halted operations this past weekend resulting from a breakdown in equipment at the LNG terminal in Bacton, UK. Gas deliveries through the pipeline gradually decreased from March 1 and completely stopped on March 4, and technicians have promised to remedy the matter by morning on March 8. The UK has a developed system of receiving terminals, and LNG regasified at the terminals is re-exported to the continent. One billion cubic meters of gas were pumped through Interconnector to Europe in February at about 38 million cubic meters per day.
EUROPEAN INVENTORIES
Current inventory levels in Europe's underground gas storage (UGS) facilities have declined to 58.93%, which is 21 percentage points above the average for the same date over the past five years, according to Gas Infrastructure Europe.
Inventories contracted 0.33 percentage point during the gas day for March 5, during the weekend, when demand typically declines. The weather forecast calls for slightly colder temperatures this week, resulting in increased offtake from UGS facilities.
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 63% capacity in February, and the figure has been 74% since the start of March.
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 2.3 billion cubic meters for the latest reporting week ending February 24, 2023, which is 33.3% less than the usual offtake for this time of the year.
The current level of inventories is around 44%, which is 19 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.