Yesterday's fire at Russian state-controlled Gazprom's Novy Urengoy condensate treatment plant in western Siberia has raised concerns about its effect on gas exports to Europe, but its magnitude is not yet clear.
Gazprom has still not disclosed the extent of the damage or its effect on gas output, saying only that it is analysing the causes and consequences of the accident, and that its subsidiary, Gazprom Refining, is carrying out repair and restoration work at the plant to prepare condensate for transport. The Russian firm told Argus today in mid-afternoon London time that the fire had been extinguished and earlier said that "measures were promptly carried out to stop production facilities".
The Novy Urengoy plant is Gazprom's largest refining unit in the far north of Russia and receives hydrocarbons from the Urengoy production complex. Urengoy's gas production was 99.8bn m³ in 2019 and 88.8bn m³ in 2020 — probably down as a result of the Covid-19-induced demand drop across the region. The area makes up just over a fifth of Gazprom's total gas production.
Gazprom has not listed the plant's dry gas processing capacity. It can process up to 13.7mn t of unstable condensate or 12.1mn-12.2mn t of de-ethanised condensate.
It is unclear how much production from Urengoy fields could be refined and exported using other facilities.
Gas from Urengoy fields is typically sent either to pipelines connected to Ukraine or to the Ukhta-Torzhok lines through an intermediary spur, judging by Gazprom's transport network map. These feed the 33bn m³/yr Yamal-Europe and 55bn m³/yr Nord Stream lines and are used mainly to transport gas from the much newer Yamal peninsula fields.
Investment bank Renaissance Capital believes the fire could reduce Gazprom's gas supply by the equivalent of 8bn m³/yr until restored. The estimate assumes that Gazprom will wait for the commissioning of a replacement for the plant in 2022 rather than reviving the damaged unit as it was already scheduled to be replaced. But the bank did not elaborate further on how it arrived at its estimate.
Mallnow flows down sharply
Mallnow flows to Germany downstream of the Yamal-Europe pipeline slumped yesterday afternoon but have since stepped up, albeit holding firmly below previous days.
Mallnow flows averaged 380 GWh/d at 06:00-19:00 GMT today, up from 240 GWh/d in the second half of yesterday's gas day. Flows were nominated higher, at 429 GWh/d, for the rest of the gas day.
Mallnow deliveries were already weak, at 546 GWh/d on 31 July-4 August, having hovered around technical capacity at 932 GWh/d earlier last month. Poland's supply has been unaffected, with deliveries down exclusively at Mallnow (see flows graphs).
Polish system operator Gaz-System told Argus today that lower Yamal-Europe flows since late July were the result of the "market behaviour of our clients". It added that it plans to make short-term Yamal-Europe capacity available in subsequent auctions, but did not elaborate further. Yamal-Europe's capacity is fully booked up until the end of September (see bookings graph).
Flows through Ukraine are unaffected, but "may hit us in 24 hours", Sergiy Makogon, chief executive of Ukraine's system operator, GTSOU, said. Nominated entries to Ukraine from Russia for yesterday and today were unchanged from flows in previous days.
European hub prices climbed sharply yesterday afternoon as deliveries at Mallnow slowed (see prices graph). And prices opened today's trading session higher before falling later in the trading session.
The Dutch TTF day-ahead market closed at €42.55/MWh yesterday, up from €41.825/MWh a day earlier and €40.55/MWh on 30 July, ahead of the initial drop in Yamal-Europe deliveries. And the winter 2021-22 price climbed even more sharply, closing at €41.495/MWh, up from €40.375/MWh a day earlier and €39.20/MWh ahead of the initial drop.
European withdrawals climb
Gazprom appeared to turn to strong storage withdrawals from its long-term European capacity to offset lower Yamal-Europe deliveries.
The stockdraw climbed to about a combined 115GWh yesterday from Gazprom's storage sites — excluding its share of Etzel EKB and Serbia's Banatski Dvor. This assumes its withdrawals from sites at which it holds only some capacity were in line with its share of the space. There was a net stockdraw of 43.3 GWh/d on 2-4 August, reversed from a net stockbuild of 212 GWh/d on 31 July-1 August when Yamal-Europe flows initially dropped. Net injections were 313 GWh/d in the previous seven days (see storage graph).
Stocks at these sites were 15.7TWh yesterday morning, much lower than in previous years. The firm probably also has some space booked commercially elsewhere.
