Recovery in wind generation cools gas prices in Europe; Gazprom requests 42.4 mcm for transit via Ukraine
MOSCOW. April 20 (Interfax) - Growth in electricity generation through wind generation has caused gas prices in Europe to decline to around $450 per thousand cubic meters.
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 41.7 mcm 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 April 20, 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 $456 per thousand cubic meters, with the spot price declining 6%.
A split between LNG prices in Asia and those in Europe has noticeably returned. In Asia, the most expensive futures contract for May on the JKM Platts index is $437 per thousand cubic meters, and futures under the LNG North-West Europe Marker are $420 per thousand cubic meters.
Growth in electricity generation through wind generation has caused gas prices in Europe to decline. Wind turbines supplied 20% of the region's electricity needs on Wednesday, nearly double the output on Sunday and Monday, after averaging 18% last week, according to WindEurope.
EUROPEAN INVENTORIES
Europe has officially started and continues the gas-injection season into underground gas storage (UGS) facilities. Current inventory levels in Europe's UGS facilities are 56.8%, which is 21 percentage points above the average for the same date over the past five years, according to Gas Infrastructure Europe.
Inventories increased 0.13 percentage points during the gas day for April 18. The volume of injection has noticeably decreased with the onset of the new working week, and the current rate is markedly below the usual injection levels over the past five years. Meantime, Europe's weather in the first twenty days of April has been somewhat cooler than the previous year.
Gazprom warns that, "Replenishing gas reserves in storage facilities could be a non-trivial task for European companies. This will be very difficult to do, given the politically motivated decisions aimed at refusing to import Russian pipeline gas. Competition for LNG will have a big effect on the volumes of gas available on the European market."
European LNG terminals operated at an average capacity of 58% in March owing to a strike at French terminals, and the load has been 62% in April thus far. The bulk of French terminals operated by Elengy are slowly returning to service.
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.
The U.S. has begun the gas-injection season into UGS facilities about a week later than usual.
Inventories rose 0.7 billion cubic meters for the latest reporting week, which is 10% lower than usual for this time of the year.
The current level of inventories is around 38%, 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.
Freeport LNG, the United States' largest LNG plant, has announced reopening all three liquefaction lines, thereby reducing the excess gas on the U.S. market and boosting supplies of LNG to the global market.