European gas reserves fall below 70%, Gazprom order for Ukraine is 42.3 mcm

Warm weather is helping Europe conserve fuel. However, gas reserves in the region's storage facilities have fallen below the 70% milestone, said Interfax.

The Ukrainian GTS Operator (OGTSU) accepted an order from Gazprom on Monday to transport 42.1 mcm of gas, the Ukrainian company reported. The Sunday order was for 40 mcm. The number applies to one of two entry points into the country's gas transportation system, the Sudzha gas measuring station. The order for transport via the Sokhranovka GIS was not accepted.

Gazprom representative Sergei Kupriyanov told reporters "Gazprom is shipping Russian gas for transit via Ukraine on February 5 in confirmed volumes of 42.3 mcm via the Sudzha GIS. The order for the Sokhranovka GIS was rejected."

OGTSU declared force majeure with regard to gas transit via Sokhranovka, since it allegedly cannot exercise operational and technological control over the Novopskov compressor station. The route through Sokhranovka used to provide transit to over 30 mcm of gas per day. Gazprom believes there are no grounds for force majeure, and no obstacles to continuing to operate as before.

Although January 2024 was actually more temperate than preliminary forecasts had suggested, the average temperature was still 2 degrees colder than the previous year. The current weather forecast for February promises temperatures one degree higher than the climate norm, at the same level as February last year.

The spot price of gas in Europe remained almost unchanged on Friday. The contract for day-ahead delivery at the TTF hub in the Netherlands closed at $321 per thousand cu. m.

Wind generation in Europe has provided an average of 25% of the region's electricity needs since the beginning of February, the WindEurope association said. Last February, wind power plants contributed 16%, while last month the figure was 22%.

There is a noticeable gap in LNG prices in Asia compared to Europe. March futures for the JKM Platts index (the Japan Korea Marker, which reflects the spot market value of cargo delivered to Japan, South Korea, China and Taiwan) are trading at $338, while futures for LNG supplied to NW Europe (LNG North West Europe Marker) are at $302.

Natural gas reserve levels in Europe are one of the key indicators for the global market.

The current figure is 69.14%, 14 percentage points above the average for the same dates over the past five years, Gas Infrastructure Europe said. Although Europe is actively limiting the use of gas and its reserves, the current level of reserves is noticeably lower than the same dates in 2023 and 2020 (the GIE database contains observational data since 2011).

During the February 3 gas day (a day off), reserves decreased 0.18 percentage points. Since the latter part of January, amid warmer weather conditions, selection intensity has been significantly lower than the average for the last five years.

European LNG terminals operated at an average productivity of 51% in January 2023; since the beginning of February, their average load has been 47%.

The state of reserves in American underground gas storage facilities is becoming increasingly important as the country actively increases exports. The United States continues to withdraw gas from its storage facilities. In the latest reporting week, gas reserves fell 5.6 bcm, a third more than usual at this time of year. Reserves in the US are currently at 55%, which is very close (a difference of only +2 percentage points) to the average for the last five years, the Energy Information Administration said.

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Oman's Duqm refinery units are currently working at 100% capacity of 230,000 bpd, Kuwait Petroleum International CEO Shafi Taleb Al-Ajmi told Reuters on Monday, as per Hydrocarbonprocessing.

The Duqm refinery is a 50/50 joint venture between Kuwait Petroleum International and Oman's OQ Group.

We remind, Azerbaijan's state oil company SOCAR is shipping Azeri BTC oil to Thailand via Africa's Cape of Good Hope to avoid the Red Sea, according to LSEG and Kpler data and traders. Attacks by Yemen-based Houthi forces on shipping in the Red Sea and Gulf of Aden are driving up freight costs and disrupting global trade. The Tilos I is carrying some one million barrels of Azeri BTC crude oil which was loaded at Turkey's Ceyhan port on January 22, according to LSEG and Kpler consultancy data. The cargo is expected to offload in Sri Racha, Thailand, on March 8, the data showed.

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Two Ukrainian attack drones struck the largest oil refinery in southern Russia in the latest in a series of long-range attacks on Russian oil facilities, said Reuters.

Local authorities in Russia said earlier that a fire had been extinguished at the Volgograd refinery following a drone attack. Oil producer Lukoil, which owns the refinery, later said the plant was working as normal.

The Kyiv source said the operation by the SBU security service struck the primary processing facility, without which the refinery could lose significant production capacity.

Ukrainian officials seldom take responsibility publicly for deep strike attacks on Russian territory. The Volgograd refinery is the latest in a series of facilities to be targeted by drones. Kyiv sees such infrastructure as important for the Kremlin's war effort.

The source told Reuters such drone attacks would continue. "By hitting oil refineries working for the Russian military-industrial complex, we not only cut off the logistics of fuel supplies for enemy equipment, but also reduce funds into the Russian budget," the source said.

The distance between the northeastern Ukrainian city of Kharkiv near the Russian border and the southern Russian city of Volgograd is more than 600km.

Russia has been conducting regular long-range missile strikes on targets in Ukraine since the beginning of its full-scale invasion, prompting Kyiv to scramble for ways to close the gap on Moscow's more advanced military technology.

Ukraine has sought to spur innovation in drone technology and to support the production of long-range drones to allow it to strike back.

We remind, imports of polymer feedstock to Russia may grow in 2024, Petr Bazunov, General Director of the Russian Plastics Processors Association (RPPA). A number of processors in our Association have decided to increase imports, as imported raw materials in Russia are sold at prices equal or close to those of SIBUR. The principle of import parity or so-called netbacks is in effect. Refiners choose the raw materials that are more profitable for them.

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LyondellBasell LYB.N beat Wall Street estimates for fourth-quarter profit on Friday, on stable demand for its chemicals in the U.S. polyethylene market, said Hydrocarbonprocessing.

The adjusted core profit from the olefins & polyolefins-Americas (O&P-Americas) segment, LyondellBasell's largest segment by sales volume, was lifted by lower gasoline crack spreads and lower ethane raw material costs during the quarter.

Olefins are used in the manufacturing of polymers such as plastic. Adjusted core profit for O&P-Americas was 58% higher at $609 million, compared with the prior-year quarter.

LyondellBasell said it expected a seasonal slowdown in demand and economic uncertainty to cause headwinds for most of its segments in the first quarter of 2024, with relatively low ethane raw material costs to continue to benefit O&P-Americas.

The chemicals manufacturer's adjusted profit for the quarter was $1.39 per share, as per LSEG calculations, which excluded certain one-time charges. Analysts' average estimate was $1.31 per share.

"During the fourth quarter, LyondellBasell's businesses delivered exceptional cash conversion amid challenging market conditions," said CEO Peter Vanacker.

We remind, LyondellBasell Industries N.V. (Rotterdam, the Netherlands) announced that China Coal Shaanxi Yulin Energy & Chemical Co., Ltd. (China Coal Shaanxi), will use the LyondellBasell Spherizone, Hostalen Advanced Cascade Process (Hostalen ACP) and Lupotech T technology for its new facility. The process technology will be used for a 300,000 metric tons per year (m.t./yr) Spherizone polypropylene plant, a 300,000-m.t./yr Hostalen ACP high-density polyethylene plant and a 250,000-m.t./yr Lupotech T vinyl acetate copolymer plant, to be built in Yulin City, Shaanxi Province, P.R. China.

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NOVA Chemicals Corporation is honoured to be named a 2024 Top Employer in Alberta for its leadership in talent recruitment and retention within the petrochemical industry, said the company.

The annual list, organized by Canada’s Top 100 Employers, annually recognizes select companies across the country as exceptional places to work based on criteria including workplace environment, social atmosphere, benefits, skills training, performance management, and community involvement.

"We are humbled to be recognized as a top employer in Alberta. Our vision at NOVA is to foster an agile, high-performing, and engaged team of employees and this recognition underscores this commitment to our people,” said Mona Jasinski, NOVA Chemicals SVP of HR and Communications. “Investing in our employees’ growth and development, creating a positive and supportive work environment, and building a modern and thriving learning culture all have direct impacts on our incredible organization, as well as our partners up and down the value chain."

Jasinski continued, “Alberta employers have always stepped forward to compete for the best and brightest talent that lives right here in our province. We’re proud to have operated in the region for nearly 50 years and to have created an environment where employees feel engaged, valued, and like they make positive impacts through their work.”

With its global headquarters in Calgary and approximately 2,200 of its 2,500 employees located across Canada, NOVA Chemicals encourages its people to use a human-centered and value-driven approach, upholding the pillars of passion, collaboration, responsibility, and innovation.

The sustainable polyethylene company aspires to become the leading sustainable polyethylene producer in North America. In 2023, it launched its strategic plan for 2030, which includes environmental, social, and corporate governance (ESG) ambitions.

We remind, Amcor, a global leader in developing and producing responsible packaging solutions, today announced a Memorandum of Understanding (MOU) with leading sustainable polyethylene producer NOVA Chemicals Corporation (“NOVA Chemicals”) for the purchase of mechanically recycled polyethylene resin (rPE) for use in flexible packaging films. Increasing the use of rPE in flexible packaging applications is an important element of Amcor’s commitment to support packaging circularity.

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