Polish Yamal gas capacity fully booked, downstream bought for Aug

London — The remaining natural gas transportation capacity available for August on the Yamal pipeline was sold during the latest round of monthly European auctions, data from marketing platforms showed, with additional sales recorded for routes further downstream.

Complementing already healthy purchases for the third quarter, the full offering of 16.67 million cu m/d at the Belarussian-Polish Kondrakti interconnection was allocated in a GSA-hosted auction, while equivalent rights for the Polish-German Mallnow point were also purchased as entry and exit capacity bundles on the RBP platform.

In addition to this, the Lanzhot interconnection between the Czech Republic and Slovakia proved to be the most popular on the PRISMA platform, with 14.48 million cu m/d of Czech-Slovak bundles sold for August, alongside 10.69 million cu m/d of single-sided Slovakian entry capacity posted by Slovakian TSO Eustream.

Across both of these products, a total of 102.93 million cu m/d of Slovakian entry capacity was offered on PRISMA.

At the German-Czech Brandov point, 4.15 million cu m/d of Czech entry was purchased out of a 12.54 million cu m/d offering, with 1.59 million cu m/d bought as a bundle.

The full booking of Yamal capacity has occurred ahead of what might be considered a strong injection month for Gazprom Export, which is currently withdrawing over 85 million cu m/d from its gas reserves in Europe during maintenance on the arterial Nord Stream supply route into Germany, and will have a strong incentive to replenish stock with this summer's European spot prices at historic lows.

The popularity of the downstream route also comes at a time when Slovakia's VTP hub is recording consistently higher prices than the rest of Europe, and is poised to export a record amount of gas to Ukraine in August. This has been reflected in Slovakian capacity sales and purchases on Gazprom Export's Electronic Sales Platform for Russian supply.

Elsewhere on PRISMA, Italian TSO Snam allocated 17.22 million cu m/d of entry rights for August, but remarkably saw very little interest in Arnoldstein bordering Austria. The Passo Gries interconnection, which receives supply from northern Europe, made up just shy of two-thirds of the total, while Mazara del Vallo -- which receives Algerian supply -- constituted a third of the aggregate.

Rights for German TSO exits into storage finally picked up after a lackluster June and July, offloading 4.26 million cu m/d of capacity, while signs of West-East flow were reflected in purchases for Austrian-Slovakian Baumgarten, which saw 3.79 million cu m/d of Slovakian entry purchased across all products, and the Belgian-Dutch VIP bundle that notched up 2.57 million cu m/d of sales.

The RBP auction for Polish entry at Mallnow recorded 4.93 million cu m/d of sales for August, while the VIP Bereg Hungarian entry point bordering Ukraine saw 5.83 million cu m/d of purchases on PRISMA.

Abundance

The interest in transportation capacity heading towards Slovakia has in part been stimulated by storage space situated on the other side of the border with Ukraine, and has been touted by many as a solution to European oversupply this summer.

Indeed, Slovakian TSO Eustream has now sold 78.6 million cu m/d of exit capacity across the Budince and Velke Kapusany interconnections for August delivery, which will be a record for Ukrainian export allocations, provided that the Budince capacity is not interrupted should Ukraine's GTSOU decide to press on with maintenance on the route in August.

The two TSOs are still embroiled in a dispute about the planned works, scheduled to begin on August 11, which could entail a full interruption until October 1. While capacity purchases at Budince have dried up since the works were first announced, interruptible Velke Kapusany entry sales have strengthened considerably.

Without resolution, the Slovakian Budince capacity would be interrupted without refund, and shippers would have to sell surplus gas, inject elsewhere, or find an alternative route to Ukraine at their own expense.

Only 24.25 million cu m/d of interruptible Velke Kapusany exit remains out of the current offering, while 42.86 million cu m/d of capacity has already been sold at Budince. Assuming those purchasing Velke have not purchased Budince already, any interruption will not easily be remedied, and options for those who could potentially be caught out are rapidly diminishing.

Given that shippers are continuing to purchase capacity heading into the region undeterred, and while abundant Slovakian purchases on Gazprom Export's ESP are now being complimented by growth in Czech Olbernhau sales in excess of typical summer demand in the country, the maintenance situation could be a ticking time bomb for European gas prices should the route to Ukraine be interrupted.