Europe conserving gas on back of moderate weather; Gazprom requests 41.2 mcm for transit via Ukraine
MOSCOW. May 23 (Interfax) - Preliminary data indicate that moderate European temperatures in May 2023 are in line with the yearly norm at about one-and-a-half degrees below May 2022, thus the region's power industry is able to conserve resources and pump more gas into storage in preparation for winter.
UKRAINIAN TRANSIT
The Gas Transport System Operator of Ukraine, or GTSOU, has accepted a booking from Gazprom today to transport 41.2 million cubic meters of gas through the country, and the figure was 40.9 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 41.2 mcm on May 23, 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 $317 per thousand cubic meters, with the spot price having dipped another 2% in one day.
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 $348 per thousand cubic meters, and futures under the LNG North-West Europe Marker are $296 per thousand cubic meters.
Wind turbines provided an average of only 11.6% of the region's electricity needs on Monday, down from over 17% on Saturday, according to WindEurope.
EUROPEAN INVENTORIES
Europe continues the gas-injection season into underground gas storage (UGS) facilities. Current inventory levels in Europe's UGS facilities are 65.93%, 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 weekend gas day for May 21, 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.