Strike threat at Australian LNG plants pushes gas price to $450 per thousand cubic meters; Gazprom requests 42.4 mcm transit via Ukraine
MOSCOW. Aug 10 (Interfax) - The threat of industrial action at several LNG plants in Australia has lifted gas prices more than a quarter to their highest level since the middle of June. A drop in wind power generation also contributed to the higher gas price.
UKRAINE TRANSIT
Gas Transport System Operator of Ukraine, or GTSOU, has accepted a nomination from Russia's Gazprom today to transport 42.4 million cubic meters of gas through the country on Thursday, as on Wednesday, data from 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 Ukraine via the Sudzha metering station at 42.4 mcm on August 10, with booking via the Sokhranovka metering station declined," Gazprom spokesman Sergei Kupriyanov told reporters.
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 spot price for gas in Europe soared 28% on Wednesday: the day-ahead contract at the TTF gas hub in the Netherlands closed at $427 per thousand cubic meters. The spot price rose further on Thursday morning, to $450.
The reason for this was the threat of strike action at the Chevron and Woodside LNG plants in Australia, the world's second largest exporter of liquefied natural gas. A reduction in supply in Asia might also affect the Atlantic market. Additional price growth factors are maintenance at gas fields in Norway and warmer weather in Europe.
The spread between LNG prices in Asia and those in Europe is widening. In Asia, the most expensive futures contract for September on the JKM Platts index is $394 per thousand cubic meters, and futures under the LNG North-West Europe Marker are $347 per thousand cubic meters.
Wind turbines generated 13.6% of Europe's electricity on August 9, half as much s on the previous three days, according to WindEurope data. Wind generation averaged at 10% in August 2022 and 14% in July 2023.
EUROPEAN INVENTORIES
Europe continues to pump gas into storage. Current inventory levels in Europe's underground gas storage facilities are 88.01%, which is 14 percentage points above the average for the same date over the past five years, according to Gas Infrastructure Europe.
Inventories rose 0.3 percentage points during the August 8 gas day. Injection rates are still markedly less than the five-year average, but it will be possible to achieve the target level of 90% by the end of September if these rates are sustained throughout the summer.
European LNG terminals operated at 56% capacity in July and 49% since the start of August. On a daily basis, LNG imports this month could be at their lowest since 2021.
U.S. INVENTORIES
Gas inventories in UGS facilities in the United States are of increasing importance for the global market, as the country is actively increasing gas exports.
The U.S. gas injection season continues. Inventories increased 0.4 billion cubic meters for the latest reporting week, which is half the norm for this time of year.
The current level of inventories is 62%, which is 12 percentage points above the five-year average, according to the U.S. Energy Department's Energy Information Administration.