Nord Stream restrictions unlikely to curb Gazprom sales
The annual shutdown of the 55bn m³/yr Nord Stream gas pipeline is unlikely to limit Russian supply in Europe, but Gazprom will need to switch to withdrawals to maintain sales.
Nord Stream is scheduled to be off on 17-30 July. Flows were 1.75 TWh/d on 1-2 July, unchanged from June and well above the pipeline's nameplate capacity of 1.59 GWh/d.
Gazprom has some space to lift transit through Ukraine to help meet nominations, but will also have to draw on its European stocks.
Annual maintenance in 2017 halted Nord Stream deliveries on 11-21 September compared with flows of 1.62 TWh/d over the rest of the month. The firm lifted deliveries to Velke Kapusany to 2.1 TWh/d from 1.6 TWh/d, which left around 1.12 TWh/d to be met using sources other than pipeline flows from Russia.
Russian exports to Europe and Turkey, excluding Blue Stream, fell to 4.69 TWh/d from 5.71 TWh/d, but Gazprom slowed injections and switched to withdrawals at its European storage capacity to make up the difference.
The firm had similarly lifted transit through Ukraine during maintenance in 2016 to make up for the restrictions to Nord Stream capacity.
Flows at Velke Kapusany on the Ukraine-Slovakia border were lower this year compared with last September at 1.54 TWh/d on 1-2 July, up from 1.53 TWh/d in June and below combined firm and interruptible technical capacity of 2.41 TWh/d. This would only allow for an increase in Ukrainian transit of 864 GWh/d, a shortfall of 889 GWh/d compared with deliveries through Nord Stream that would need to be met from other sources.
The highest Velke Kapusany delivery in recent years was the 2.19 TWh/d in September 2013, which if repeated would leave 1.1 TWh/d of Nord Stream that would still need to be offset.
Gazprom could achieve this comfortably with a swing to withdrawals, especially when taking into account that it has been injecting in Europe.
And the firm's stockbuild may have been boosted by Gazprom delivering to itself to fill its European storage capacity ahead of the maintenance.
Lower deliveries to its own storage capacity and withdrawals could reduce the need for higher flows from Russia. Stocks at Gazprom's capacity at Austria's Haidach facility were 11.6TWh yesterday morning, up from 8TWh a year earlier. The firm also holds capacity at the Katharina, Etzel, Rehden and Jemgum facilities in Germany, the Netherlands' Bergermeer facility and the Czech Republic's Damborice facility, among others.
Gazprom says it uses its European storage capacity to meet long-term contract obligations rather than to capitalise on storage spreads.
The firm has previously said it has almost 900 GWh/d of withdrawal capacity in Europe before it contracted extra space in central and eastern Europe last year that may have boosted its withdrawal capacity.
While the firm's European stocks and withdrawal capacity are likely to be lower in July than during last year's Nord Stream maintenance, they would still be sufficient to offset the pipeline's halt once combined with higher Ukrainian transit.
Withdrawals of close to 900 GWh/d would result in a higher swing in net storage movements given that the firm would also reduce injections.
Gazprom maintaining deliveries to customers with a switch to higher Ukrainian transit and storage withdrawals while Nord Stream is off typically results in the maintenance having little effect on outright prices because there is little change in supply at the hub.
The aggregate European stockbuild typically slows when Gazprom reverses to withdrawals, but injections by other firms remain largely steady — at least once adjusted for changes in demand or supply from other sources.
The firm plans to ensure storage capacity abroad of at least 5pc of annual export volume, which means that Gazprom should have around 10bn m³ held in European storage facilities this year, the firm has said. But a final decision on how much gas it will inject for use over the winter will be made in September, it said.
| Gazprom withdrawal capacity at selected sites | ||
| Storage facility | Total stocks (TWh) | Gazprom withdrawal capacity (GWh/d) * |
| Haidach | 11.6 | 198.2 |
| Bergermeer | 22.3 | 279.3 |
| Rehden | 34.6 | 105.8 |
| Damborice | 1.3 | 73.8 |
| Jemgum | 2.5 | |
| Etzel | 16.3 | |
| Total | 88.6 | 657.1 |
| — Gazprom | ||
| * Maximum capacity, independent of withdrawal curves | ||
Related news posts
CEE gas operators begin binding capacity offer process
CEE gas operators begin binding capacity offer process
London, 2 May (Argus) — Gas transmission system operators (TSOs) across central and eastern Europe have launched the start of binding incremental capacity processes aimed at facilitating larger gas flows from south to north. Romanian, Bulgarian, Hungarian, Moldovan and Ukrainian operators have published joint documents outlining the necessary conditions for participating in the upcoming annual auctions on 1 July. Bulgarian and Romanian TSOs Bulgartransgaz and Transgaz will offer an additional roughly 123 GWh/d of capacity from Bulgaria to Romania at Negru Voda 1-Kardam on top of existing available capacity of 126-142 GWh/d depending on the year ( see BG-RO table ). In the event of a successful auction and subsequent economic test, the TSOs hope to reach a final investment decision (FID) in the third quarter of this year and commission the upgrades in the third quarter of 2026. Commercial operations could begin in the fourth quarter, aligning with the start of the 2026-27 gas year. This timeline has been moved forward by one year from the original proposals earlier this year . Transgaz, along with Hungary's FGSZ, will offer up to 73 GWh/d of additional capacity from Romania to Hungary at Csanadpalota on top of existing available capacity of 5-71 GWh/d depending on the year ( see RO-HU table ), but maintained its three-tiered approach elaborated in an earlier market consultation . Depending on the level of capacity to which firms commit at the auction, capacity could increase by 9.5 GWh/d, 47.3 GWh/d or 72.5 GWh/d. The smallest project could start commercial operations in the first quarter of 2028, the middle level in the third quarter of 2028, and the highest level in the third quarter of 2029. These timelines are pushed back by roughly one year from the originally-proposed dates in the February consultation. And Transgaz, along with Ukraine's GTSOU, will offer an additional 77 GWh/d of capacity from Romania to Ukraine at Isaccea 1-Orlovka 1 on top of existing available capacity of 97-109 GWh/d depending on the year ( see RO-UA table ). The TSOs aim to reach FID in the third quarter of this year and commission the project in the fourth quarter of 2028. Commercial operations could begin in October 2028. GTSOU and its Moldovan counterpart Vestmoldtransgaz will offer 173 GWh/d towards Moldova from Ukraine at Kaushany starting from the 2027-28 gas year, while simultaneously offering 159 GWh/d of capacity from Moldova towards Ukraine at Grebenyky. By Brendan A'Hearn Available and incremental capacity at Negru Voda/Kardam GWh/d/yr Gas year Available existing cap Incremental cap Total 2024-25 141 - 141 2025-26 141 - 141 2026-27 142 123 265 2027-28 142 123 265 2028-29 142 123 265 2029-30-2042 126 123 249 — Bulgartransgaz, Transgaz; numbers rounded Available and incremental capacity at Csanadpalota GWh/d/yr Gas year Available existing cap Incremental cap Total 2024-25 43 - 43 2025-26 46 - 46 2026-27 71 - 71 2027-28 13 - 142 2028-29 13 - 13 2029-30 5 73 78 2030-31 34 73 107 2031-32 34 73 107 2032-33-2039 63 73 136 — FGSZ, Transgaz; numbers rounded Available and incremental capacity at Isaccea/Orlovka GWh/d/yr Gas year Available existing cap Incremental cap Total 2024-25 109 - 109 2025-26 109 - 109 2026-27 109 - 109 2027-28 109 - 186 2028-29 109 77 186 2029-30-2039 97 77 174 — GTSOU, Transgaz; numbers rounded Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Shell's 1Q profit supported by LNG and refining
Shell's 1Q profit supported by LNG and refining
London, 2 May (Argus) — Shell delivered a better-than-expected profit for the first quarter of 2024, helped by a strong performance from its LNG and oil product businesses. The company reported profit of $7.4bn for January-March, up sharply from an impairment-hit $474mn in the previous three months but down from $8.7bn in the first quarter of 2023. Adjusted for inventory valuation effects and one-off items, Shell's profit came in at $7.7bn, 6pc ahead of the preceding three months and above analysts' estimates of $6.3bn-$6.5bn, although it was 20pc lower than the first quarter of 2023 when gas prices were higher. Shell's oil and gas production increased by 3pc on the quarter in January-March and was broadly flat compared with a year earlier at 2.91mn b/d of oil equivalent (boe/d). For the current quarter, Shell expects production in a range of 2.55mn-2.81mn boe/d, reflecting the effect of scheduled maintenance across its portfolio. The company's Integrated Gas segment delivered a profit of $2.76bn in the first quarter, up from $1.73bn in the previous three months and $2.41bn a year earlier. The segment benefited from increased LNG volumes — 7.58mn t compared to 7.06mn t in the previous quarter and 7.19mn t a year earlier — as well as favourable deferred tax movements and lower operating expenses. For the current quarter, Shell expects to produce 6.8mn-7.4mn t of LNG. In the downstream, the company's Chemicals and Products segment swung to a profit of $1.16bn during the quarter from an impairment-driven loss of $1.83bn in the previous three months, supported by a strong contribution from oil trading operations and higher refining margins driven by greater utilisation of its refineries and global supply disruptions. Shell's refinery throughput increased to 1.43mn b/d in the first quarter from 1.32mn b/d in fourth quarter of last year and 1.41mn b/d in January-March 2023. Shell has maintained its quarterly dividend at $0.344/share. It also said it has completed the $3.5bn programme of share repurchases that it announced at its previous set of results and plans to buy back another $3.5bn of its shares before the company's next quarterly results announcement. The company said it expects its capital spending for the year to be within a $22bn-$25bn range. By Jon Mainwaring Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US Fed signals rates likely to stay high for longer
US Fed signals rates likely to stay high for longer
Houston, 1 May (Argus) — Federal Reserve policymakers signaled they are likely to hold rates higher for longer until they are confident inflation is slowing "sustainably" towards the 2pc target. The Federal Open Market Committee (FOMC) held the federal funds target rate unchanged at a 23-year high of 5.25-5.5pc, for the sixth consecutive meeting. This followed 11 rate increases from March 2022 through July 2023 that amounted to the most aggressive hiking campaign in four decades. "We don't think it would be appropriate to dial back our restrictive policy stance until we've gained greater confidence that inflation is moving down sustainably," Fed chair Jerome Powell told a press conference after the meeting. "It appears it'll take longer to reach the point of confidence that rate cuts will be in scope." In a statement the FOMC cited a lack of further progress towards the committee's 2pc inflation objective in recent months as part of the decision to hold the rate steady. Despite this, the FOMC said the risks to achieving its employment and inflation goals "have moved toward better balance over the past year," shifting prior language that said the goals "are moving into better balance." The decision to keep rates steady was widely expected. CME's FedWatch tool, which tracks fed funds futures trading, had assigned a 99pc probability to the Fed holding rates steady today while giving 58pc odds of rate declines beginning at the 7 November meeting. In March, Fed policymakers had signaled they believed three quarter points cuts were likely this year. Inflation has ticked up lately after falling from four-decade highs in mid-2022. The consumer price index inched back up to an annual 3.5pc in March after reaching a recent low of 3pc in June 2023. The employment cost index edged up in the first quarter to the highest in a year. At the same time, job growth, wages and demand have remained resilient. The Fed also said it would begin slowing the pace of reducing its balance sheet of Treasuries and other notes in June, partly to avoid stress in money markets. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
FERC OK’s Virginia Transco gasline expansion
FERC OK’s Virginia Transco gasline expansion
New York, 1 May (Argus) — The US Federal Energy Regulatory Commission (FERC) today gave Williams the green light to expand natural gas capacity to Virginia by 101mn cf/d (2.9mn m3/d) on its Transco pipeline. The project, called the Commonwealth Energy Connector, involves the construction of 6.3 miles of new pipeline within Transco's existing right-of-way in southeast Virginia, near the border with North Carolina. The project also includes adding horsepower at compressor station 168, west of the new pipeline segment. Williams plans to begin construction this winter and put the project into service by the end of 2025. Environmental advocacy group Sierra Club opposed the project, arguing FERC failed to assess its potential greenhouse gas emissions, rendering its National Environmental Policy Act analysis moot. FERC disagreed, conceding that although the project's final Environmental Impact Statement demonstrated it would contribute to greenhouse gas emissions, the effects of those emissions on the environment could not be measured because FERC lacks the methodology to do so. The US south-Atlantic gas market has become more volatile in recent years as gas and power demand have soared, outpacing pipeline capacity expansions in the region. The combined gas consumption of Virginia and North and South Carolina in 2022 averaged 4.7 Bcf/d, up by 69pc from a decade earlier, US Energy Information Administration data show. Regional gas and power consumption is widely expected to continue climbing through the end of the decade on a massive build-out of data centers , especially in Virginia. By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more