European gas prices decline as wind generation rises; Gazprom requests 42.4 mcm for transit via Ukraine
MOSCOW. Sept 19 (Interfax) - Rising electricity output from wind generation to the highest level in the past forty-two days has pressured gas prices in Europe, and rather strong winds have been forecast for the region in the coming days, which should further pressure current gas prices.
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 41.5 mcm yesterday, data from the GTSOU show.
The published nomination is technically the maximum possible flow in this direction, given all of the restrictions imposed by the Ukrainian side.
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 September 19, 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 provided an average of 24% of the region's electricity needs yesterday, with the figure having been 13.5% in September 2022 and 13% in August 2023, according to WindEurope.
The day-ahead contract at the Dutch TTF gas hub in the Netherlands closed at $379 per thousand cubic meters, with the spot price having dropped 6% the previous day.
There is a noticeable split between LNG prices in Asia and those in Europe. In Asia, the most expensive futures contract for October on the JKM Platts index is $476 per thousand cubic meters, and futures under the LNG North-West Europe Marker are $405 per thousand cubic meters.
EUROPEAN INVENTORIES
The level of natural gas reserves in Europe has become a key market indicator for the global market, with the region overall continuing to pump gas into underground gas storage (UGS) facilities. However, offtake is increasing as well, thus net injection is already nearly zero and is near net withdrawal, with France having already reached net offtake of gas.
Current inventory levels in Europe's UGS facilities are 94.15%, which is 9 percentage points above the average for the same date over the past five years, according to Gas Infrastructure Europe.
Inventories increased 0.13 percentage point during the weekend gas day for September 17, with the pace still markedly lagging the usual injection levels over the past five years. Nevertheless, reserves have already reached well above the target level of 90% storage capacity.
European LNG terminals operated at an average capacity of 50% in August, and they have averaged 50% since the beginning of September.
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. continues the season for injecting gas into UGS facilities. Inventories rose 1.6 billion cubic meters for the latest reporting week, which is 25% lower than the typical volume for this time of the year.
The current level of inventories is 67%, which is 7 percentage points higher than the average figure for the past five years, according to the U.S. Energy Department's Energy Information Administration.