Eastern European countries just downstream of the Ukrainian border,
Hungary and Austria in particular, have boosted their natural gas stocks
considerably -- to as high as 97% of capacity -- to hedge themselves
against any disruption to Russian gas supply.
The current 10-year gas supply and transit deal between Russia's
Gazprom and Ukraine's Naftogaz expires at the end of 2019 and there is
concern that, without a new contract from January 1, Russian gas transit
via Ukraine could be disrupted.
Several rounds of talks have taken place between the two companies
in recent weeks, but disagreements over debts, transit tariffs and
several legal disputes between the two state-owned entities are
militating against a deal. No preliminary agreement has yet been
reached, and no date has been set for the next round of talks with the
European Commission -- with the contract set to expire in less than two
weeks.
Ukraine re-exported 92%, or 239 million cu m/d, of the gas it
imported from Russia to the rest of Europe (including Slovakia, Hungary,
Romania and Moldova) through November, 60% of which (or 156 million cu
m/d) was transited to Slovakia, data from S&P Global Platts
Analytics showed.
Slovakia then re-exported 129 million cu m/d or around 83% of this
gas to Austria, while around 9% each went to Czech Republic and Hungary.
Any disruption to Russian supply would be quickly felt in these
downstream states. These countries have all been stockpiling as a
result, building up their natural gas stocks gradually, even in the cold
month of December.
"That is also my guess: Eastern European countries are holding back
gas for this scenario: a Russia-Ukraine gas disruption," a German gas
trader said.
Storage facilities in Hungary and Austria are both just over 97%
full, data from Gas Infrastructure Europe showed. Similarly, Slovakia
and Czech Republic total stocks are 96% and 95% of their maximum
capacity.
Another interesting number is on stocks in Germany, where the
facilities are the fullest, over 97.5% full with outright stock levels
the highest, at 20.55 Bcm. Part of the explanation is down to the fact
its geographical position means it will most likely flip to a net gas
exporter to Austria and increase its exports to Czech Republic if a
Ukrainian transit deal is not in place by January 1, 2020.
Some of the German storage facilities are also thought to be filled
and rented out by Gazprom which is too expecting a supply shortfall
which it is attempting to mitigate.
"I guess the Russians have rented a lot of storage in Germany to ensure supply continues," the German trader said.
Stocks in France and Italy are significantly lower than those in
Eastern and Central Europe. Supply disruption aside, part of the
shortfall is down to the required withdrawal curve in these countries.
"In France and Italy you have 'must withdraw' rules -- a withdrawal
curve -- and you have to withdraw a certain amount in November and
December," a Dutch gas trader said. Stocks in France and Italy were 87%
full, data from GIE showed.
In the Netherlands they were only 80% full, and the rapid
acceleration of the complete phase out of the giant Groningen gas field
there -- due by mid-2022 sparked relatively higher withdrawal rates.
