* UK's total gas stocks high enough to meet 25 days of
* Spot gas prices down 30 pct since beginning of Ukraine
* Forward prices down 12.5 pct during same time
LONDON, May 30 British spot gas prices were
trading at their lowest since October 2010 on Friday morning as
healthy supplies clashed with low summer demand and high storage
levels following a mild winter and spring.
Gas prices for delivery the next working day traded as low
as 42.25 pence per therm on Friday morning, a third lower than
they stood at the beginning of the Ukraine crisis in late
February, and they are down over 40 percent since their winter
peak last December.
"We're going into June now, so gas demand is approaching its
annual lows during the summer. Even if Russia cuts gas to
Ukraine now, it doesn't really matter in the shorter term, at
least until the beginning of the winter heating season in
October," one gas trader said.
Gas prices for delivery during the peak demand winter
season, when an ongoing crisis between Russia, Ukraine and the
European Union would hit markets more than during the summer
lull, are down 12.5 percent since late February.
"The forward market is slightly more concerned about the
situation in Ukraine than the spot market, hence winter prices
didn't drop quite as sharply as spot prices, but even here
supply looks pretty relaxed as utilities in Europe are pretty
well prepared," another trader said.
SUPPLY CRISIS TURNS DEBT CRISIS
The natural gas crisis between Russia, Ukraine and the
European Union is fast turning from being a crisis of supply to
one of payment.
Ukraine's gas bill for supplies from Russia is over a
billion dollars a month, and Moscow says Kiev already owes it
more than $5 billion for unpaid supplies, equivalent to around 3
percent of Ukraine's GDP.
Russia's Gazprom has threatened to cut off
supplies to Ukraine in June if it does not receive at least some
of its unpaid bills or an advance payment for future supplies
Delaying an agreement will make it increasingly difficult
for already cash starved Kiev to meet its obligations.
While the gas debt crisis becomes more accute, the supply
situation eases the further Europe moves into the warm summer
Russia meets around a third of Europe's gas demand and sends
almost half of this via Ukraine.
When Russia previously cut exports over pricing disputes
with Kiev in 2006 and 2009, this happened during times of peak
demand in winter, causing shortages and freezing across Europe.
But following a mild winter and spring as well as healthy
supplies from non-Russian gas sources such as pipeline imports
from Norway or liquefied natural gas (LNG) tankers from Qatar,
Europe's gas storage sites are well filled this year and demand
is very low as the region enters summer, the season with the
Five LNG tankers are scheduled to arrive in Britain during
the next week, adding which together carry enough gas to meet
3.5 day's worth of current British gas demand, adding to the
same amount already stored in Britain's LNG storage sites.
The week's worth of LNG supplies available to Britain adds
to conventional natural gas from pipeline imports and domestic
production that worth around 19 days' worth of current demand
already in storage.
"All in all, we have enough gas in storage to meet 25 days
of demand, and that's the best I can remember over the past five
years or so," one gas analyst said
"Even if Russia cuts supplies, our storage combined with LNG
imports and North Sea supplies from Britain, Norway and the
Netherlands should be enough to get by for quite some time," he
(Reporting by Henning Gloystein, editing by William Hardy)