Spain pipeline imports, CGGT demand decline on strong wind output

London — Natural gas pipeline imports into Spain have declined sharply so far this month, along with CGGT demand, as wind power generation doubled from a year ago, an analysis by S&P Global Platts showed Wednesday.

Algerian flows slid to an average of 15.3 million cu m/day so far this month, down 22% from a year ago. Moreover, March imports are below February levels, which were already the lowest in seven years. At the end of last year, African imports were running at over 45 million cu m/d.

"Wind generation spiked in Spain this week, with CCGT demand declining significantly," Platts Analytics' Konstantinos Pantazopoulos said. "In turn, PVB day-ahead eased, trading almost flat against PEG -- even turning negative on Monday -- with French imports at the VIP Pirineos point decreasing to about 6 million cu m/d."

Indeed, Spanish wind power generation in March to date averaged almost 328 GW/day, almost doubling both year on year and month on month, REE data showed.

An increase in previously unusually low LNG stocks became another consequence of soaring wind power generation, market sources said.

Total stocks in all Spanish facilities climbed above the 40% mark this month, according to Platts Analytics. LNG stocks had dropped to about 31% in late February, the lowest level during this period in two years. However, stock levels were still lower year on year by around 10%.

However, the current situation is temporary and demand for natural gas will pick up, once strong wind generation is eases.

"More supply will be needed: Algerian flows, LNG volumes, imports from France... whatever it takes," a Spanish gas trader said.

Wind output is expected to jump further Thursday to a high/low range of 17.5 GWh/12 GWh from 13 GWh/10.2 GWh Wednesday, REE data showed. A longer-term forecast from spotrenewables shows a sharp decline next Tuesday, with peak output plunging to 1.8 GWh or a load factor of 8%.