Gazprom maximizes injection into European UGS facilities mere days before start of cold season

MOSCOW. Sept 27 (Interfax) – Natural gas injection into underground gas storage (UGS) facilities used by Gazprom in Northwest Europe has again reached a fairly high level after stocks this summer were not replenished but spent to cover current high customer demand and compensate for transit withdrawals through gas pipelines stopped for repairs.

The end of the injection season is about a month away, and even at the increased pace, it will no longer be possible to bring stocks at UGS facilities to a satisfactory level.

GAZPROM

During the gas day of September 25, the volume of injection into these facilities reached its highest level in nearly two months (since July 29), according to data from Gas Infrastructure Europe.

At the moment injection is proceeding into three UGS facilities: Reden (5.45% full) and Jemgum (Gazprom’s share 66.76% full) in Germany and Bergermeer (25%) in the Netherlands. Injection at these facilities has been increasing since September 16 and has now reached its maximum. During the weekend, injection increased even more (almost twice the normal pumping level for those days), as current demand in the system decreases and more resources are released for injecting gas into storage.

No injection or offtake is currently underway from Austria’s Haidach (18.4% full) and Germany’s Katharina (43.54% full) storage facilities.

Gazprom also has storage capacity at Damborice in the Czech Republic and Banatski Dvor in Serbia, but no data are displayed in Gas Infrastructure Europe. Gazprom also uses virtual storage (organized through the commercial interaction of European counterparties and the use of various financial instruments), but information about these resources is not disclosed in any way.

THE MARKET’S MAIN NERVE

The state of European gas stocks and the inability to boost them to safe levels by the onset of cold weather due to global shortages is the main fear pushing gas prices up. Rising fuel prices in Asia, another, even stronger pole of demand, are also helping. The November JKM Platts spot LNG futures index has already reached $982 per 1,0000 cubic meters. The index reflects the spot market value of cargoes shipped ex-ship (DES) to Japan, South Korea, China and Taiwan.

After a cold winter and record gas offtake, Russian and European UGS facilities are severely depleted, but filling the Russian UGS is an absolute priority for Gazprom. In mid-September the company reported that intensive injection is ongoing at Russian UGS facilities, with about a quarter of its company’s current production (about 1.37 billion cubic meters per day) going to Russian facilities (325 million cubic meters per day).

In August, Gazprom’s gas resources for injection decreased against the backdrop of an accident at the Urengoy Condensate Treatment Plant, which is technologically linked to gas production in the Nadym-Pur-Tazovsky gas-bearing province.

EUROPE AND THE WORLD

In Europe as a whole, gas stocks in UGS facilities reached 73.48% at the end of the gas day on September 25. This is 15.38 percentage points below the average for the past five years. In September gas injection rates into UGS facilities are at about the same level as the mean annual rate (only about one percentage point less), however, this is absolutely insufficient to bring gas stocks in UGS facilities at least to a level close to that of previous years.

The inflow of LNG to the region’s terminals in September decreased by 6% compared to last year’s level.

The spot price of gas in Europe has now stabilized above $800/1,000 cubic meters after surges towards $1,000 per thousand cubic meters and rebounding sharply. The contract with Monday delivery at the TTF hub in the Netherlands is $827/1,000 cubic meters.

The heating season has begun earlier than usual in Russia this year. The average September temperature in Russia is 2.5 degrees lower than a year ago. This trend is also observed in Europe, but so far with less intensity – this September it is only one degree colder there.