European UGS inventories under 82%, Gazprom requests 35.4 mcm for transit via Ukraine

KYIV. Jan 16 (Interfax-Ukraine) – European UGS inventories have fallen below 82%, but historically this is one of the highest levels observed at the current stage of the offtake season. Europe is making great efforts to save gas, with warm weather aiding in reducing consumption. The region is expected to see more customary winter weather ahead, which will lead to increased gas consumption.

Gazprom’s request for pumping Russian gas through Ukraine has not changed markedly from the previous days and months.

The Gas Transmission System Operator of Ukraine, or GTSOU, has accepted a booking from Gazprom today to transport 35.4 million cubic meters of gas through the country, as on Sunday, data from GTSOU show.

Capacity was requested only through one of two entry points into Ukraine’s Gas Transmission System, the Sudzha metering station. A request was not accepted through the Sokhranivka metering station.

Prices on the European market traditionally fell ahead of the weekend.

After falling to below $700/1,000 cubic meters in the middle of the preceding week, the day-ahead contract at the Dutch TTF gas hub in the Netherlands closed at $877 per 1,000 cubic meters and the February contract at $728.

Asian prices remain higher than European ones. In Asia, the most expensive winter futures contract for February on the JKM Platts index is now $947 per 1,000 cubic meters on the heels of European prices.

Power generation from wind turbines in Europe averaged 29% last week after an average of 24% in the week January 2-8, according to data from WindEurope.

European inventories in underground gas storage (UGS) facilities have currently fallen to 81.7%, or 18 percentage points above the five-year average, according to Gas Infrastructure Europe (GIE).

However, Gazprom has also warned that "the load on UGS facilities in Europe will be higher than in previous years owing to the changed logistics and sources of gas supplies to the European market."

Supplies were down 0.18 p.p. on the gas day of January 14. Gas consumption in industry declines on the weekend and gas offtake from UGS facilities also consequently declines.

European LNG terminals have been operating at an average capacity utilization of 63% since early January after an average of 67% in December. Germany opened its second LNG terminal on the Baltic coast over the weekend: the terminal in Wilgermshafen has been added to the terminal in Lubmin.

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, primarily to Europe.

The latest reporting week ending January 6 saw supplies at UGS facilities increase by a token 300 million cubic meters. S&P Global had forecast a decline of 200 million cubic meters.

The current level of inventories is 60%, which is almost in line with the average for the past five years, according to the U.S. Energy Department’s Energy Information Administration.

The EIA currently expects UGS stocks to drop by 60 billion cubic meters this winter to the average for the last five years. Natural gas volumes in storage facilities should total 40 bcm by the end of March, which would be 8% below the average for five years.