Cold snap cuts Russia’s Ukraine natural gas flows to Europe by 8-10%

Russian natural gas entering Europe through the Ukrainian transit system at Vel’ke Kapušany on the Slovak border showed an 8-10% reduction on Tuesday, with a similar reduction likely on Wednesday because of severely cold weather that has increased gas demand in Russia, ICIS Heren understands.

Temperatures in the Moscow area have fallen to minus 15-22e_SDgrC during the day and minus 22-29e_SDgrC at night.

Russian gas exporter Gazprom said on Wednesday that, despite domestic gas consumption in Russia soaring, it had met its obligations to its European customers.

“This is a purely technical situation, which will probably last a few days while the cold snap lasts,” Valery Nesterov, an analyst at investment bank Troika Dialog, said. “The significance of the shortfall in deliveries at one border crossing should not be exaggerated. Gazprom will do its utmost to show it is a reliable supplier to Europe.”

Spot prices on northwest European hubs rose on Wednesday but that was attributed more to local demand jumps than wider concerns about availability of Russian supplies.

To meet export nominations, Gazprom had used all available gas transport routes and had significantly increased off-take from its underground storage facilities in Europe.

In particular, the trans Black Sea Blue Stream pipeline had been operating at full capacity since mid-January and delivery volumes through the Yamal-Europe pipeline – taking gas via Belarus into Poland – had increased by 20% since the middle of last week.

Focus on individuals countries

Italian system operator Snam ReteGas confirmed that a reduction of around 12 million cubic metres (Mm³) had been estimated for Wednesday’s gas day.

According to Snam, the total gas flowing from Russia is 96.2Mm³, compared with the previously expected 108.3 Mm³.

Referring to Gas Storage Europe (GSE) figures, the Italian ministry of economic development told the EU Commission that Italian gas storage was 65% full, and that gas could be supplied from Norway and Algeria and by LNG cargoes.

Part of GIE Gas Infrastructure Europe, an association of pipeline, storage and LNG infrastructure companies, GSE publishes natural gas storage figures for Europe.

Czech system operator NET4GAS said there had been no change in volumes transported from Russia through the Czech system (see separate story for Poland’s reaction).

Flows through the Nord Stream pipeline, which takes Russian gas under the Baltic into Lubmin on the German coast, have increased in the past two weeks, reaching 27Mm³ on 31 January, according to information published by operator Nord Stream AG.

The pipeline connects into the 35 billion cubic metre (Gm³)/year north-south OPAL line running through Germany to the Czech Republic. The Nord Stream pipe could help cover shortfalls in Europe but it was commissioned only recently and is still building volume. Nord Stream AG was not available for comment on Wednesday.

Cold weather in many parts of Europe recently has led to high demand for Russian gas in Europe and elsewhere.

On Wednesday, Ukraine’s minister of economic development and trade, Andrey Klyuyev, said the country’s gas transport system was working normally. He said there was sufficient gas not only to meet winter peak demand but also for the whole of the heating season (see ESGM 25 January 2012).

Klyuyev said that, in the previous 24 hours, 138.5Mm³ of gas had been withdrawn from Ukrainian storage, while imports had reached 128Mm³, with total Ukrainian consumption at 325Mm³.

The European Commission said on Wednesday it was aware of the flow situation and was in contact with the member states concerned. It said member states were able to cover their Russian supply shortfalls with gas from underground storage and alternative routes and suppliers.

“Given the surplus of gas in the European markets in previous weeks, the Commission is confident the market is able to allocate gas where it is most needed,” it said.

GSE storage data this week showed that stock levels were 10 percentage points higher than at the same time last year in the European countries it monitors.

Russian gas exports to Europe totalled 150Gm³ in 2011, of which 101.1Gm³ was transited through Ukraine (see ESGM 25 January 2011). ES