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21
October
2022

Hungary boosts gas reserves in UGS facilities to 80%; Gazprom requests 42.4 mcm for transit via Ukraine

MOSCOW. Oct 21 (Interfax) – Hungary has become the latest European Union country to reach 80% reserves in underground gas storage (UGS) facilities, as required by EU regulation, while reserves in Latvia remain substantially below the level at 56%, and it is unlikely that the situation will correct itself before the cold weather.

Although Hungary did not rush to fill its UGS facilities, it was in a rather comfortable position, as the country has a surplus of storage capacities used for the needs of both the local market and in Serbia. Hungary has cut gas consumption, using 10.8 billion cubic meters in 2021, nearly 25% less than the all-time high in 2005.

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

UKRAINIAN TRANSIT

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, as on Wednesday, data from GTSOU show.

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 October 21, with booking via the Sokhranovka metering station declined," Gazprom spokesman Sergei Kupriyanov told reporters.

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 there are no grounds for the force majeure or obstacles to continuing operations as before.

EUROPEAN MARKET

Wind turbines generated 18.1% of the EU’s electricity on average on Monday, Tuesday, Wednesday, and Thursday following 14.7% last week, according to data from WindEurope.

The spot price for gas in Europe – the day-ahead contract at the TTF hub in the Netherlands – closed at $587 per thousand cubic meters, the lowest since August 2021, though the November futures contract at the TTF hub rose 13% to $1,292 just on Thursday. In Asia, the most expensive winter futures contract for February on the JKM Platts index is now $1,323.

The Nord Stream pipeline is completely shut down due to problems with equipment maintenance caused by sanctions. In addition, last week two strings of Nord Stream 1 and one of Nord Stream 2 depressurized near the Danish island of Bornholm.

European liquefied natural gas terminals have been operated at an average of 59% of capacity in September, as in August, rising to around 62% so far in October, data from Gas Infrastructure Europe indicate. LNG imports could reach 11 bcm in October, one of the highest figures ever.

EUROPEAN INVENTORIES

Europe continues to inject gas into underground gas storage facilities, with the average level of reserves reaching the targeted 80% at the end of August, since when the pace of injection has slowed. European storage typically transitions from net injection to net off-take around October 20.

Inventories in UGS facilities have risen to 92.92%, up 0.14 percentage points from October 19, the last reporting date, according to Gas Infrastructure Europe data. Over 100 bcm of active gas have accumulated in UGS facilities in absolute terms.

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

Gas stocks at the Incukalns UGS facility in Latvia are the lowest in the EU and are stuck below 56%. This UGS facility is responsible for reserve gas supplies to Estonia, Latvia and Lithuania, as well as Finland.

U.S. INVENTORIES

U.S. gas companies have ramped up off-season injection owing to the end of the air conditioning period and the scheduled maintenance shutdown until October 18 at the Cove Point LNG plant. However, there will likely be decreasingly less available gas to replenish reserves because of rising exports and gas consumption domestically.

The country’s injection rate has fallen for the second consecutive week, with 3.1 bcm of gas injected over the last reporting week, as at October 14, following 3.5-3.6 bcm the previous two weeks.

The current inventory level is below 70%, which is substantially below inventory at UGS facilities in Europe, and in Russia, which has over 90%.

UGS inventories in the U.S. are now 9.4% above the five-year minimum, according to the U.S. Energy Department’s Energy Information Administration. Current inventory lags 5% behind the five-year average.