European inventories in UGS facilities top 85%; Gazprom books 42.4 mcm for transit via Ukraine

KYIV. Sept 19 (Interfax-Ukraine) – European inventories in underground gas storage (UGS) facilities have reached 85% of UGS capacity, and Europe is striving to stock up on gas before the weather forces the continent to start drawing from its reserves.

LNG deliveries to Europe in September are at their lowest level for all of 2022.

The request for transit of Russian gas through Ukraine today has changed little from the previous days and months.

The Gas Transmission 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 against 42.4 mcm the previous gas day, data from GTSOU show.

The Nord Stream pipeline from Russia to Europe has been unable to restart as planned after maintenance.

Spot prices for gas in Europe have adjusted to $1,713 per 1,000 cubic meters for the TTF day-ahead contract.

Prices in Asia are rising on the back of prices in Europe. The most expensive January futures on the JKM Platts index, which reflects spot market prices for gas delivered to Japan, South Korea, China and Taiwan, are $1,736per 1,000 cubic meters.

Europe is now experiencing the most comfortable days of the year in terms of costs to compensate for the negative impact of weather conditions, as air conditioners are no longer needed, and it is too early to turn on the heating. Moreover, wind power generation is very high.

Wind plants generated an average of 17.3% of the European Union’s electricity last week, peaking at 24.8% on Saturday, after averaging 12% the week of September 5-11, while averaging 9.6% in September last year, data from WindEurope show.

European liquefied natural gas (LNG) receiving terminals are operating at an average of 57.5% of capacity in September compared to 59% in August, data from Gas Infrastructure Europe show. Imports of expensive LNG are decreasing partly because of gradually reaching the necessary reserve level in European storage. September LNG imports are already competing with the February figure for the annual minimum.

Europe is continuing to inject gas into underground gas storage (UGS) facilities, with the average level of reserves reaching the targeted 80% of capacity at the end of August. After reaching the target level, there has been some reduction in the injection rate.

Inventories in UGS facilities are currently at 85.58%, up just 0.28 percentage points from the last reporting date on September 17, according to Gas Infrastructure Europe data.

Gas inventories in UGS facilities have currently exceeded 80% in Belgium, the Czech Republic, Croatia, Denmark, France, Germany, Italy, the Netherlands, Poland, Portugal, and Spain.

Meanwhile, Austria, Bulgaria, Hungary, and Latvia are lagging, with the latter in the rear at around 52%. Latvia resumed injecting gas into storage at the beginning of September.

The gas reserves at the Incukalns UGS facility in Latvia are the lowest in the EU. Pumping is 66.7%-75% below the European average despite this UGS facility being responsible for reserve gas supplies to Estonia, Latvia and Lithuania, as well as Finland.

Steady gas exports in the United States are reducing the amount of resources for injection into storage, which is supporting prices on the domestic market.

Current reserves in the country’s UGS facilities are only 4.1% above the lowest figure in the past five years, and the figure has only fallen in the summer injection season, data from the U.S. Energy Department’s Energy Information Administration show. The lag behind the norm for the past five years is 11%.

The rate of injection increased during the last reporting week, with 2.2 billion cubic meters accumulated compared to 1.6 bcm on average over the previous three weeks.

The current inventory level is around 68%, which is substantially below the reserves at UGS facilities in Europe, with the EU having topped this level a month-and-a-half ago, and even more so in Russia, which has over 90%.

The rate of injection into U.S. UGS facilities has improved somewhat after the suspension of exports through the Freeport LNG terminal owing to an accident.