Platts Special Analysis of Russia-Ukraine Natural Gas Developments:
While no reduction in flow of natural gas to European buyers has yet been observed today, the price of natural gas across Europe saw sharp gains. However, the price of electric power and carbon emissions were not measurably affected.
Ukraine transit flows of natural gas to Europe at the Slovakian/Ukraine entry point of Velke Kapusany were steady throughout the day at approximately 4.5 million cubic meters per hour (mm m3/h ) – equivalent to 108 million cubic meters per day – in line with the delivery levels of the prior delivery day and that of last week.
Alternative routes of Russian gas to Europe – Nordstream and Yamal – also flowed at rates similar to those of recent days, with Nordstream at 4.2 mm m3/h and Yamal entry point of Mallnow at 3.3 mm m3/h.
Flow nomination data for gas imports to Italy showed little to no impact. Trans Austria Gas pipeline (TAG) imports were nominated at 76 mm m3/day and Transitgas pipeline imports were 40 mm m3/day, similar flow rates to those observed in the last week.
The front-month July contract on the UK’s Notional Balancing Point (NBP) market traded at least as high as 45.25 pence per therm (p/th) during Monday morning, showing an 8.40% rise from the market’s close on Friday. Within Monday’s activity, however, Ukraine reassured European markets that transit gas would flow uninterrupted and prices subsequently softened, but did not give back all of the day’s gains. The UK physical price of natural gas for July delivery finished the day at 42.60 p/th, up by 2.04% from Friday. The day-ahead physical contract was up by 2.79% to 42.40 p/th and Winter 2014 (Winter ‘14) natural gas for October delivery gained 0.74% to 61.20 p/th.
Price gains at Italy’s PSV trading hub were stronger than other European markets. The day-ahead physical natural gas contract closed the trading day at a 5.70% increase to Friday at Eur20.50 per megawatt hour (/MWh). The July price gained 3.31% from Friday to Eur20.40/MWh and Winter ‘14 was up 2.72% from last week to Eur26.45/MWh.
Germany’s NetConnect day-ahead natural gas contract closed Monday at Eur18.10/MWh, rising by 1.12% from Friday, but was well below intra-day trades of Eur18.90/MWh seen at midday London time. July and Winter ‘14 (4Q 2014 +1Q2015) gained 1.10% and 0.80% at Eur18.55/MWh and Eur25.15/MWh, respectively.
The Dutch TTF day-ahead natural gas price closed 0.56% higher than Friday at Eur18.10/MWh and Winter 14 gained 0.40% at Eur24.90/MWh.
Power prices in Germany were not impacted by the latest developments in the Ukraine-Russia situation, but rather from feedstock fuel and concerns of a hot and dry summer, with the German July baseload price up another 10 euro cent to Eur32.80/MWh, the highest level for a front-month contract since March 3rd.
In the area of carbon emissions trading, the price of EU Allowances (EUAs) was little changed Monday. Initial price strength gave way to modest profit-taking. December 2014 EUAs traded Monday around Eur5.70 to Eur5.80/mt in early deals, compared with Eur5.71 at the close Friday.