Russia Shows No Sign of Boosting Gas Flows to Europe in April
Russia is showing no sign of further increasing natural gas flows to Europe next month, leaving demand for the fuel uncertain.
(Bloomberg) -- Russia is showing no sign of further increasing natural gas flows to Europe next month as the continent’s peak winter season nears its end, leaving demand for the fuel uncertain.
Top supplier Gazprom PJSC again opted not to book any pipeline space for April to send gas to Germany via the key Yamal-Europe link, monthly auction results on Monday show. The company also stuck to its current gas transit volumes through Ukraine as no extra capacity was offered.
While Gazprom’s exports rebounded in March from abnormally low levels seen at the start of this year, there’s no certainty on flows next month. As the heating season ends, the European Union will start replenishing its depleted gas storage sites. However, purchases for injections may peak later this year given current prices. Europe’s benchmark gas futures have retreated from record-highs earlier this month, but are still about five times above year-earlier levels.
Europe wants to ensure its gas inventories remain sufficiently full ahead of next winter. At the same time, the continent is hoping to slash its dependence on supplies from Moscow. The EU’s executive arm is mapping out a path to end the bloc’s reliance on Russian shipments that could see import needs cut by two-thirds already this year. Most replacement volumes are likely to arrive via tankers as liquefied natural gas.
Gazprom has repeatedly said that it’s fully meeting demand from its long-term European buyers. The company still has an option to use daily bookings for the Yamal-Europe link, which is something it’s done in the past.
On the Ukrainian route, Gazprom can send 109.6 million cubic meters a day through the border with the neighboring country under its transit contract, en route to Slovakia, Poland, Hungary, Romania and Moldova. Auctions for extra capacity were canceled. Last month, Ukraine’s grid operator said it was unable to transport additional gas to Europe as it faces “extreme” circumstances given Russia’s invasion.
However, for gas transiting Ukraine to enter the EU via the Velke Kapusany station in Slovakia, the biggest route, Gazprom booked extra space to ship about 22 million cubic meters a day -- on top of its long-term volumes. That’s a small increase compared to this month.
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With assistance from Bloomberg