In Europe, natural gas prices continued to trend after a sharp rise last week. Participants’ activity on the UEEX was very high, but low demand did not lead to active conclusion of sales deals.

The initiators of the trades at the Ukrainian Energy Exchange have formed 62 positions for the sale/purchase of natural gas resource of November, December and in UGS. In total, 12 companies were the initiators of trading during the week. There was rather high level of competition during the trading sessions. For example, the number of participants of each trading during the week were about 10 companies. Resources of November, December and gas in UGS facilities were traded. The starting prices of the November resource and the UGS resource were almost at the same level, while the December resource was 8% more expensive than the November.

In total, 10 companies put up positions for sale and 2 for the purchase of natural gas during the week. The initiators of the week’s trading sessions were Naftegaz Trading, Smart Energy, DE Trading, PPC, Craft Energy, INCORGAZ and others. Company ECO-SPILKA offered the resource of UGS for sale for the first time on the exchange. According to the results of the trading sessions, 4 million cubic meters of the resource were sold in UGS facilities and 2 million cubic meters of November resource. There was not enough demand for the resource of December, it is obvious that buyers are not ready to pay a sufficiently high price for offered gas.

Only a slight downward price trend was observed during the week. Thus, the week at the Ukrainian Energy Exchange was completed with the following exchange quotations: 5225 UAH for the November resource and 5250 UAH per tcm for the UGS resource.

Last week spot prices rose by an average of 6.5% compared to a week ago, which is not significant. Next month and quarter quotations decreased by 4.1% and 2.4%, respectively. Spot prices in Europe were about 179$/ tcm, month ahead contracts were 5% more expensive, the quarter ahead was almost 12% more expensive, the season ahead was 6.8% more expensive than the current spot prices. Just last week there was a stabilisation of natural gas prices in Europe at the same level as last week. Temperatures in Europe are expected to drop this week, and will stimulate demand for heating and possible price fluctuations.

Last week, natural gas imports amounted to about 19.5 mcm, down 35% from last week’s figure. Ukraine has started intake from UGS facilities season, which averaged 18.3 mcm/day. Consumption decreased by 11.7 mcm to 93.29 mcm/day compared to the previous week due to the relatively warm weather. Distributed capacities amounted to 21.08 mcm and accounted for only 31.8% of the technical ones. In terms of free capacity, the leading border crossing point on the border with Slovakia is almost 28 mcm/day. This signals about continued low level of imports due to rising natural gas prices on the European market. Imports are likely to remain low in November. Gas reserves in UGS facilities decreased to 21.58 bcm.

In the form of auctions, 55 tender procedures were conducted. In total, more than 5.5 mcm of natural gas worth 33 million UAH were sold. The largest contract was taken by Ekotekhnoinvest. It will supply 670 tcm of natural gas at the initial price of 5.45 UAH/cubic meter to the Department of Education of the Kropyvnytsky City Council. The same amount was sold by Smid Group at the initial price of 4.50 UAH/cm for the regional clinical hospital of Zhytomyr Regional Council. Prices ranged from 3.40 to 6.34 UAH per cubic meter. The average price was 4.96 UAH per cm. There were no non-market offers. There is no tendency to increase auction prices in public procurement yet.

The first tanker with American LNG for ERU Trading will arrive in Poland on November 19. The first tanker (Patris) with American LNG purchased by ERU Trading, will arrive in the Polish terminal Swinoujscie on November 19. The vessel with 173.4 tcm of LNG departed from the U.S. Sabine Pass and is now close to the city of Skagen, in northern Denmark. After regasification in Swinoujscie, gas from the pipeline system will enter Ukraine through the Germanovychi border crossing point.

The Verkhovna Rada allowed new GTS Operator to buy gas at production-technological losses without tenders. The document amends the Law of Ukraine "On Public Procurement". The bill allows new operator to conclude contracts with Ukrtransgaz within six months without purchasing procedures, which will allow the GTSOU to ensure continuous provision of gas transportation services. In particular, it will allow Ukrtransgaz to buy gas at PTL without tenders. On 14th November, 286 and 266 MPs voted for the document in the first and second reading, respectively.

In 10 months of 2019, natural gas imports to Ukraine increased by 44.5% to 13.3 bcm compared to last year’s volumes due to the preparation for a possible stop of transit in January 2020, as well as against the background of favourable pricing conditions in the European market. Importers keep part of the gas volumes in the Ukrainian UGS facilities in the customs warehouse regime and carry out customs clearance of these consignments as necessary during the peak period of consumption in winter months. The directions of gas import to Ukraine in January-October 2019: Slovakia - 8.526 bcm (64.1% of total imports), Hungary - 3.463 bcm (26.0%), Poland - 1.308 bcm (9,9%).

Gazprom Export extends the term of contract execution. At first, customers were offered contracts of various types of urgency, the most popular of which were "day ahead", "month ahead" and the maximum "quarter ahead". Now the company is ready to offer more long-term contracts. "Our new dynamic trading tool (ETP) confirms its effectiveness and shows good results. As part of its work, we intend to offer the market new products with longer delivery times - "season", "year" and "gas year". At the same time, we also aim to further promote contracts with shorter delivery terms. In the future, we plan to develop trade with spreads that will allow us to further improve the efficiency of the ETP," said Elena Burmistrova, General Director of Gazprom Export.