Gazprom requests 39 mcm for transit via Ukraine, highest since start of year

KYIV. Feb 20 (Interfax-Ukraine) – The request for Russian gas transit via Ukraine has risen to its highest level since early April.

The Gas Transmission System Operator of Ukraine, or GTSOU, has accepted a booking from Gazprom on Monday to transport 39.2 million cubic meters of gas through the country, unchanged from the weekend. From Wednesday to Friday last week, the transit request stood at 35.8 mcm per day, data from the 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.

Warm weather has led to a decline in prices in Europe. The day-ahead contract at the Dutch TTF gas hub in the Netherlands fell 5% in the past day, closing at $538 per 1,000 cubic meters. Apart from the weather, downward pressure on prices also came by way of the weekly cycle – prices almost always decline by the weekend.

The “Asian premium”, or the spread between gas prices in Asia and LNG prices in Europe, is steady. In Asia, the most expensive futures contract for March on the JKM Platts index is $638 per 1,000 cubic meters, and futures under the LNG North-West Europe Marker are $580 per 1,000 cubic meters.

Generation from wind turbines in Europe met 16% of the region’s electricity needs last week, about the same as during the week of Feb. 6-12, according to WindEurope.

Current inventory levels in Europe’s underground gas storage (UGS) facilities have declined to 64.1%, which is 21 percentage points above the average for the same date over the past five years, according to Gas Infrastructure Europe.

Inventories contracted 0.16 percentage point during the gas day for February 18.

Inventories were at their lowest since the New Year holidays. At the end of last week, the region saw a new wave of warm weather, while demand for gas traditionally declines over the weekend.

The relatively mild weather in October, November and January, in addition to the continent’s austerity measures, have resulted in the level of reserves in UGS facilities being at an all-time high for this time of year since monitoring began, thereby underpinning the authorities’ confidence in getting through the winter in good shape.

European LNG terminals operated at 62% capacity in January, and have averaged nearly the same in February. The level of LNG reserves in tanks at receiving terminals has been reducing greatly, implying that the inflow of new LNG shipments to the region is falling amid low prices and competition from Asia.

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.

Reserves decreased 2.8 billion cubic meters for the latest reporting week ending February 10, shrinking more than 50% compared with to the previous week.

The current level of inventories is 47%, which is 9 percentage points higher than the average figure for the past five years, according to the U.S. Energy Department’s Energy Information Administration.

Cold weather is forecast in the U.S. for February, which should result in increased energy costs for heating and increased gas consumption. On the other hand, Freeport LNG, the country’s largest LNG plant, is still postponing restart following an accident, and gas remains on the domestic market that has been expected to be exported. There are reports that gas tankers are leaving the terminal, which, it transpired, are taking old stocks accumulated before the accident out of storage tanks.

The EIA currently expects UGS stocks to drop by 60 bcm 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.