Kateryna Filippenko, principal analyst, European gas research, at Wood Mackenzie, said:
- Daily bookings on both routes are still possible, although unlikely
September marked the end of Gazprom’s annual firm capacity through Poland (Yamal-Europe pipeline).
It has now shifted to quarterly and monthly capacity bookings.
Gazprom booked 11 mmcm/d of quarterly capacity for the October-December period and 32 mmcm/d of monthly capacity for October.
As a result, flows through Yamal-Europe dropped from about 100 mmcm/d in September to about 40 mmcm/d in October, adding to market anxiety and sky-rocketing prices.
Subsequently, overall Russian flows dropped again the 1st week of October following reduced flows through Ukraine, sparking another wave of price rise.
After President Vladimir Putin hinted at potential increase in flows on 6 October, flows did rise compared to the 1st week of the month, but remained lower than in September and markedly below levels seen in the previous years.
- The booking of 30 mmcm/d on Yamal-Europe - out of the 86.5 mmcm/d available - is similar to the capacity booked for October
- Assuming full utilisation of other routes, total flows to Europe, excluding Turkey, could be expected at about 367 mmcm/d – on par with the last few days, but below 2020 and 2019.
- Earlier in autumn, Russia’s tight domestic gas balance could have been the reason why flows were modest considering high prices
- But now we believe the availability of gas has increased as Russian production is on the rise, and injections in the domestic storage are supposed to finish by the start of November.
- With the European gas balance tightening into the winter, the risk is high that Russian gas will not provide additional supply flexibility
- The completion of the gas-in procedures at Nord Stream 2, coupled with no significant capacity bookings on other routes seems to send a strong signal to Europe – Gazprom might be ready to supply more gas, but conditional on Nord Stream 2 getting a green light