Europe's gas prices on rise again

Gas prices in Europe have returned to their highest levels this year after the scheduled additional auction for Ukraine's gas transmission capacities for June did not take place.

Report informs, citing Interfax, that the price of gas delivered on Wednesday at the TTF hub in the Netherlands amounted to $333 per thousand cubic meters after a 2.5-year high on May 17 ($342) and a minimum since the beginning of the year on May 20 ($290).

The market situation in the last two weeks indicates a correlation not only with the price of other significant indices of the energy basket (oil, CO2 emission quotas, LNG prices in Asia), but also with announcements / results of additional auctions for capacities in the Ukrainian direction.

Gazprom has a long-term reservation of 40 billion cubic meters of Ukrainian capacities for 2021, which is 109 million cubic meters per day; 15 million cubic meters were additionally booked at a regular auction on May 17, that is, a total of 124 million cubic meters per day.

As reported, on May 25, the Ukrainian GTS Operator put up for a monthly auction additional capacity for gas transit from Russia to Europe in the amount of 63.7 million cubic meters per day. No bids were submitted for these capacities.

A similar auction was already held at the end of April - for May, but then the Russian gas monopoly Gazprom JSC (actually the only possible shipper on this route) also refused to book additional capacities.

According to the CEO of the Ukrainian Gas Transmission System Operator, Serhiy Makogon, “this would make it possible to supply an additional 2 billion cubic meters to Europe in June to accelerate the replenishment of gas reserves in European underground gas storage facilities,” he said, commenting on the results of the May 25 auction.

Gas market participants argue that in this way the Russian monopoly is interested in maintaining high gas prices in Europe by creating an artificial shortage of gas.

Currently, Europe is dramatically increasing gas consumption. Global supplies of LNG, as well as pipeline gas from Russia, are at their maximum, but this does not allow for the time being to start massive gas pumping into underground storage facilities to prepare for next winter.

Since early 2021, the average price of a day-ahead contract on TTF has already reached $250 per thousand cubic meters.