Russian Gazprom’s gas transit through Ukraine meets contracted volume requirements
Russian natural gas giant Gazprom has applied for gas transit through Ukraine at a volume of 107.8 million cubic meters (mcm) per day as of Feb. 7, under a long-term contract which provides for 109 mcm per day, Russia’s Interfax news agency reported on Feb. 7.
Meanwhile, demand has not lessened for alternatives to pipeline imports, such as gas extraction from underground storage facilities (USFs) and regasified LNG (liquefied natural gas.)
“The attractiveness of the Ukrainian gas transmission corridor continues to grow as prices stabilize and European customers become more accepting of imported gas …,” Interfax reported.
“European consumers have been increasing Gazprom contract selections since early February after the contract price (most contracts use an index for a month in advance) passed the peak and approached the current prices of the spot (short-term) market.”
The news of the increased gas supply has created some turbulence in the market – prices initially fell as customers turned to the spot market and remaining USF stocks, then rose as import orders fell.
An example of such a “swing” was observed last week: Gas pumping through Ukraine fell from 108 mcm on Feb. 1 to 82 mcm on Feb. 3, while the price at the TTF (Title Transfer Facility) virtual trading point for natural gas in the Netherlands fluctuated by 17%.
As for the export pipelines, Gazprom is primarily loading the Nord Stream-1 gas pipeline (170 mcm per day), followed by the Ukrainian gas transmission corridor (109 mcm per day under a long-term contract).
However, Gazprom has not booked any capacity on the Belarusian Yamal-Europe pipeline as of Feb. 7, which typically acts as in a closing or balancing role.
Direct flow through the Yamal-Europe gas pipeline was terminated on Dec. 21, and resumed for only a few hours on Feb. 1.
The level of gas reserves in European USFs dropped to 36.21% as of the morning of Feb. 6. This is 14% below the average for the past five years.
Thus, in the first five days of February, gas consumption from USFs is one-and-a-half times higher than the average level over the past five years.
Gas supply from LNG terminals to the European gas transmission system has doubled in February 2022 compared to February 2021.
Meanwhile, electric energy generation from renewable sources in Europe is consistently low.
The contribution of wind generation to electrical energy generation in the region amounted to 16% last week (from Jan. 31 to Feb. 6) compared to 14.5% the week before last (from Jan. 24 to Jan. 30).
Prices for gas contracts with delivery as of Feb. 7 stand at $925 per 1,000 cubic meters at the TTF gas hub. On the previous trading day, Feb. 4, it reached $985 per 1,000 cubic meters of gas.
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