Commercial injections of natural gas into Hungarian storage sites have surged in the first fortnight of the country’s new gas year, data from storage operator MFGT shows.
The surge follows a number of recent decisions by the government aimed at incentivising storage injections to secure natural gas supply for the upcoming gas winter, in light of the recent geopolitical tension in Ukraine.
In the first three months of the Hungarian injection cycle, which began on 1 April, shippers put an average 4.4 million cubic metres (mcm)/day of gas into store, with stocks increasing 10.4 percentage points to 18.2% of capacity in this time.
But injections have ramped up to an average of nearly 13.1mcm/day since the start of July, bringing stocks up to 22.8% of the total 4.23 billion cubic metres commercial capacity offered by MFGT. This is still 3.7 percentage points behind the same stage last year, when MFGT stocks would go on to peak at just 35.9% of capacity on 9 November 2013. The current rate of injections is the highest since at least the 2012/13 storage year.
As part of a transmission capacity tariff overhaul announced in June, the annual cost for shippers to send stored gas to the Hungarian grid has been cut by 56% to Hungarian forint (Ft) 8.95 (€0.03)/megajoules/day. This will make withdrawals cheaper for shippers during the winter months, creating additional incentive for injections since the new tariff came into force on 1 July.
Additionally, on 30 June, the Hungarian government published a new regulation obliging the storage operator MFGT to offer its working storage volume to shippers as an interruptible injection and withdrawal service. This provides a further financial incentive for shippers to make commercial storage bookings as the interruptible transmission tariff is 90% of the firm fee when interruptions impact a maximum of 10 days, 50% when interruptions total 11-30 days and just 10% if interruptions exceed 30 days.
The new regulation also extended the injection cycle of the current storage year by one month to 31 October 2014 to allow companies more time to store gas ahead of the withdrawal cycle which will now begin on 1 November.
Consequently on 2 July, MFGT began offering shippers, on a first-come, first-served basis, 15,000 units of 3.42m megajoules (88,260 cubic metres) bundled with 100 days interruptible injection capacity and 70.31 days interruptible withdrawal capacity.
As well as recent changes to the Hungarian storage regime, one shipper based in Hungary said that the current soft spot gas price for prompt delivery in Hungary was supporting shipper interest in storage bookings.
A strong discount between prompt contracts and the front winter has been a European-wide trend this summer. At the nearby Austrian VTP hub, Day-ahead has closed at an average €6.386/MWh discount to Winter ’14 in July. This compares with a much tighter €0.406/MWh spread in the same period of 2013.
On 30 June, Hungarian state-owned power incumbent, and parent company of MFGT, said that it had approved a decision to loan Ft 100bn from Hungarian state holding company MNV to purchase gas for storage, which is set to ensure that this year’s stocks exceed at least the 50% of storage capacity. Jake Horslen