Russian gas supplies to Italy are expected to jump to 94 million cu m on Friday, according to nominated volumes for the day, with Algerian deliveries set to drop sharply as a result.
Italian imports of gas from northwest Europe, meanwhile, are set to remain high as the spread between the Italian PSV hub and the Dutch TTF continues to incentivize selling.
Italy is often a good gauge of whether supply contracts are competitive versus each other and versus the northwest European hubs at any particular time.
Russian supplies to Italy had dropped to just 69 million cu m/d on Wednesday and Thursday, due to planned maintenance at the Tarvisio interconnection point, according to data from Platts Analytics’ Eclipse Energy.
Deliveries from Algeria rebounded to 44 million cu m/d over the two-day period having fallen back sharply from late May, with field maintenance the likely reason.
Since May 24, Algerian exports to Italy had slumped to an average 27 million cu m/d, the Platts Analytics’ data shows, and are nominated for just 27 million cu m again for Friday.
By contrast, natural gas flows into Italy from Northwest Europe via the Passo Gries interconnection point are nominated at 38 million cu m for Friday — close to the five-month high registered earlier in the week.
The PSV-TTF day-ahead spread had already been growing prior to the Algerian issues on stronger gas-for-power demand in Italy due to warm weather, but soared after the Algerian flows dipped.
The PSV-TTF spread was Eur3.325/MWh on Thursday, according to S&P Global Platts assessments.
The current spread is favorable for traders, given the total transportation cost from the TTF market area to Italy is around Eur2/MWh, made up of an annual capacity cost of roughly Eur1.70/MWh and a variable fee in Italy of roughly 30 euro cent/MWh.
