European gas inventories top 65%, Gazprom requests 40.9 mcm for transit via Ukraine
MOSCOW. May 22 (Interfax) - Gas inventories in Europe's underground storage facilities have reached 65.61% of their capacity. As long as the weather is not too hot, operators are able to replenish inventories with confidence, which has a downward effect on prices.
However, this is far from the maximum inventory level on the same date in the observation history of Gas Infrastructure Europe: in 2020, the level was 69.19% on the same date. In addition, in two years on the same date reserves were above 60% - in 2011 (61.29%) and 2014 (60.37%). Given the weak injection rate, current levels could soon fall behind results for those years.
UKRAINIAN TRANSIT
The Gas Transport System Operator of Ukraine, or GTSOU, has accepted a booking from Gazprom today to transport 40.9 million cubic meters of gas through the country, and the figure was 40.3 yesterday, 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 40.9 mcm on May 22, 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
Wind turbines in Europe accounted for 14.9% of the region's electricity needs since the beginning of May, according to WindEurope. For the same first 20 days of May 2022, that share was 13%.
The spot price for gas in Europe fell by another 2% on Friday. The day-ahead contract at the TTF hub in the Netherlands closed at $322 per thousand cubic meters.
A split between LNG prices in Asia and those in Europe remains. In Asia, the most expensive futures contract for June on the JKM Platts index is $351 per thousand cubic meters, and futures under the LNG North-West Europe Marker are $304 per thousand cubic meters.
EUROPEAN INVENTORIES
Europe continues the gas-injection season into underground gas storage (UGS) facilities. Current inventory levels in Europe's UGS facilities are 65.61%, which is 19 percentage points above the average for the same date over the past five years, according to Gas Infrastructure Europe.
Inventories increased 0.41 percentage points during the gas day for May 20, with the pace still markedly lagging the usual injection levels over the past five years. Nevertheless, reserves could reach the target level of 90% storage capacity by the end of September if injection continues at this pace throughout the summer.
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 67% in April, and they have averaged 63% since the beginning of May. Terminals have begun to shut down for annual maintenance work as the spring-summer season starts.
Moreover, the European market is becoming less attractive for LNG consignments because of declining prices.
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.
Freeport LNG, the United States' largest LNG plant, has reopened all three liquefaction lines, thereby reducing the excess gas on the U.S. market and boosting supplies of LNG to the global market.
The U.S. continues the season for injecting gas into UGS facilities. Inventories rose 2.8 billion cubic meters for the latest reporting week, which is the typical volume for this time of the year.
The current level of inventories is around 47%, which is 18 percentage points higher than the average figure for the past five years, according to the U.S. Energy Department's Energy Information Administration.