Norwegian gas supplies to Europe, UK still top of five-year range in May

Norwegian pipeline gas exports to continental Europe and the UK remained at the top of the five-year range in May amid sustained high European prices, an analysis of data from S&P Global Commodity Insights showed June 7.

Norwegian deliveries totaled 9.49 Bcm in May -- or an average of 306 million cu m/d -- with supplies at the top of the five-year range for the fourth consecutive month.

The total May volume is higher than in April, when supplies reached 9.36 Bcm, but the May average was lower than in the shorter month of April when deliveries averaged 312 million cu m/d.

Supplies in May were impacted by some unplanned maintenance, including at the giant Troll field which saw volumes reduced by up to 17 million cu m/d toward the end of the month.

Unplanned work also cut capacity during May at the Karsto and Kollsnes processing plants, and the Kvitebjorn field.

Supplies were also reduced to the UK during May as prices at the UK NBP continued to trade much lower than on the Continent, disincentivizing producers from sending gas to the UK.

Norwegian deliveries to the UK slipped from 2 Bcm in April to 1.9 Bcm last month, and remain well down compared with the most recent peak of 3.15 Bcm in December 2021.

Total average Norwegian gas exports hit a five-year high in December last year of 334 million cu m/d as suppliers looked to make the most of record high European gas prices, with some producers diverting reinjection gas for export.

European gas prices have been at sustained highs since September 2021, first due to Russian supply constraints and concerns over storage, followed by a surge in prices after the Russian invasion of Ukraine on Feb. 24.

The TTF front-month contract was last assessed on June 6 at Eur81.33/MWh, down on the 2022 average to date of Eur98.05/MWh, but still 215% higher year on year, according to Platts price assessments by S&P Global Commodity Insights.

Company action

Norway's gas supply remains strong, with flows boosted by moves by Equinor and others to divert gas usually used for reinjection for oil recovery for export to Europe.

However, as oil prices also surge to multi-year highs, producers could be looking to reconsider the strategy.

Equinor has said it plans to maintain higher gas output at its Heidrun, Oseberg and Troll fields through the summer after increased production permits were approved by the energy ministry.

Equinor's senior vice president for gas and power marketing and midstream, Helge Haugane, said last month that the company would be able to increase gas exports to Europe by more than 5 Bcm thanks to the new initiatives.

Aker BP, meanwhile, said in March it had decided to halt gas injection altogether at two parts of the Skarv field, allowing for Skarv gas exports to increase by up to 20%.

Norwegian gas production is also set for a boost after Equinor resumed LNG production at the Hammerfest export plant this month following a fire in September 2020 that forced its closure.

Hammerfest LNG is fed with gas from the Snohvit field, which was also shut in during the outage.

Equinor said on June 2 that the plant had resumed operations and first LNG was now in tank at the plant.

The Arctic Voyager -- one of three LNG vessels that had been waiting to take cargoes -- departed the facility late June 6, according to Platts cFlow ship and commodity tracking software from S&P Global. The other two vessels -- Arctic Lady and Arctic Princess -- are anchored outside the facility waiting to take cargoes.

Country flows

On a country-by-country basis, supplies of Norwegian gas to the Netherlands reached a seven-month high at 1.58 Bcm as the TTF price held a significant premium over the UK NBP.

The TTF month-ahead price averaged Eur92.08/MWh in May compared with an NBP front-month average of just Eur61.41/MWh, S&P Global price data showed.

UK prices have increasingly disconnected from Continental Europe in recent months due to strong LNG imports, but low demand and limited storage injection and re-export capacity.

Supplies to Germany fell as deliveries to the Netherlands surged, but remained above 3 Bcm.

Prices at the German THE hub remain among the highest in northwest Europe, due largely to Germany's lack of LNG import infrastructure and lower deliveries from Russia.