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Highlights


Total flows through three main corridors 9.1 Bcm in February

Nord Stream, Yamal-Europe supplies almost at total capacity

Russian gas flows through Ukraine stay low despite cold snap

Russian gas flows to Europe in February via its three main pipeline routes amounted to 9.1 Bcm, according to data from S&P Global Platts Analytics, as mild weather across the continent in the first part of the month reduced demand for Russian deliveries.

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Flows averaged 324 million cu m/d -- up from January's 310 million cu m/d, which was the lowest monthly average since August 2016 -- but they were down on the February flows of 2017 when cold weather hit much of Europe.

Deliveries via Nord Stream and Yamal-Europe to northwest Europe remained at close to maximum through February, and supplies picked up via Ukraine toward the end of the month when the "Beast from the East" cold weather front sent temperatures plunging from February 26.

Russian gas supplies to Europe hit a new record high in 2017 due to high demand -- both in the winter to meet high demand and in the summer to replenish European storage stocks.



Gazprom's gas has also been competitive with European hub pricing over the past few years given the low oil price environment combined with Gazprom's pricing structure leaning toward more hub indexation, with customer nominations increasing as a result.

But the mild weather through January and most of February 2018 had a significant impact on Russian flows, especially through the Ukraine route to central Europe and Italy.

Flows via Velke Kapusany on the Ukraine-Slovakia border dropped to a near three-year low in January, with supplies averaging just 68 million cu m/d.

In February, flows via Velke Kapusany totaled 2.3 Bcm -- an average of 82 million cu m/d.

That is still well down from an average of 140 million cu m/d in 2017.

By contrast to the dip in supplies via Ukraine, deliveries via the northern routes -- Nord Stream and Yamal-Europe -- were again effectively maxed out, with combined supplies of 6.8 Bcm in February, or an average of 243 million cu m/d.

GAZPROM DATA

Gazprom said in a brief statement late Thursday that total deliveries to the Far Abroad (all of Europe plus Turkey, but not the countries of the former Soviet Union) amounted to 17.4 Bcm last month, up slightly from volumes delivered in January.

That brings its total supplies in 2018 to date to 34.7 Bcm, Gazprom said, 2.1% lower than the first two months of last year.

With the cold spell toward the end of February, Gazprom said it broke its all-time supply record to the Far Abroad for eight consecutive days, reaching an absolute record level of 699.3 million cu m on February 28.

Russian pipeline supplies were high in 2017 despite hub prices mostly being at a discount to the oil-indexed contract price range from April until November.

TTF month-ahead prices are now trading above the range through the first quarter of 2018, according to Platts Analytics estimates and the current forward curve, providing an incentive for Russian gas purchases in the nearer term.

The TTF month-ahead drops back into the range again in Q2 before falling below the range for the period May-December, as the recent oil price rally makes oil-indexed gas more expensive again.

The oil-indexed range stays relatively flat until spring 2019, with the TTF month-ahead price moving back into the range in the first quarter of 2019.

--Stuart Elliott, stuart.elliott@spglobal.com
--Edited by Jonathan Fox, jonathan.fox@spglobal.com