Europe taking more gas out of storage to soften blow of LNG terminal strikes; Gazprom requests 42.4 mcm for transit via Ukraine
MOSCOW. March 9 (Interfax) - Europe has increased gas withdrawals from underground storage facilities sharply to offset the impact of the shutdown at liquefied natural gas terminals in France.
Unions have halted operations at all four LNG terminals in France in order to protest pension reform in the country. 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.
The figures show that the sector has significant room in terms of UGS capacity to increase supplies to the market. However, France currently has some of the lowest reserves in UGS facilities at 35%.
The strikes have affected the pace of gas consumption throughout the European Union - withdrawals have reached their highest level for the entire offtake season
UKRAINIAN TRANSIT
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, compared with 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 9, with booking via the Sokhranovka metering station declined," Gazprom spokesman Sergei Kupriyanov told reporters.
The nomination is the highest technically possible for this direction, given the restrictions imposed by Ukraine.
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 shutdown of the LNG terminals in France has not affected gas prices in Europe. The day-ahead contract for today at the Dutch TTF gas hub in the Netherlands closed at $473 per thousand cubic meters.
The spread between LNG prices in Asia and those in Europe is noticeable. In Asia, the most expensive futures contract for April on the JKM Platts index is $496 per thousand cubic meters, and futures under the LNG North-West Europe Marker are $465 per thousand cubic meters.
Wind turbines provided 13% of the region's electricity needs last week, but 15% in the first three days of this week, according to WindEurope.
EUROPEAN INVENTORIES
Current inventory levels in Europe's underground gas storage (UGS) facilities have declined to 57.78%, which is 21 percentage points above the average for the same date over the past five years, according to Gas Infrastructure Europe.
Inventories contracted 0.78 percentage points during the gas day for March 7, the most so far this heating season.
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 their highest ever for this time of year.
European LNG terminals operated at 63% capacity in February, and the figure has been 70% 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, as the country is actively increasing gas exports.
Mild weather has resulted in less gas being withdrawn from American storage facilities. Inventories decreased 2.3 billion cubic meters for the latest reporting week, 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 five-year averages, according to the U.S. Energy Department's Energy Information Administration. The current level of inventories is almost at a five-year high.
Freeport LNG, the largest U.S. LNG plant, has announced reopening two of its three liquefaction lines, thereby reducing the gas surplus on the U.S. market and boosting supplies of LNG to the global market.