Flows of natural gas from Algeria via pipeline into Spain have been running at multi-year highs so far in January with firm domestic demand and higher gas-fired generation boosting flows, data from S&P Global Platts Analytics showed.
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Spain received a total of 54 million cu m of gas from Algeria via the Medgaz and Maghreb pipelines combined during Monday's gas day, with receipts via Maghreb of 34 million cu m rising to their highest since December 2013.
The boost in Algerian receipts has been primarily driven by firm domestic demand, with Local Distribution Zone demand cracking the 100 million cu m/d mark on Tuesday, reaching its highest in over five weeks at 103 million cu m.
Furthermore, Spanish gas-for-power demand has also picked up, reaching 19 million cu m on Tuesday after having been up at 29 million cu m on Monday after having been below 10 million cu m/d for each gas day between December 23 and January 5.
Gas-fired generation economics in Spain have been hit in recent months due to lower wholesale electricity prices, with concerns over French nuclear availability easing allied to hydro-electricity reservoir level fears receding.
S&P Global Platts assessed the Spanish month-ahead clean spark spread -- the theoretical margin for a 50%-efficient HHV gas-fired power plant including emissions -- was as low as Eur0.330/MWh on Monday after having been close to Eur11/MWh in early November.
The prompt CCS has fallen into negative territory in each of the last two first quarters, S&P Global Platts price data showed.
With imports from France steady between 10 million and 12 million cu m/d since early December, LNG regasification has also picked up to cover the growth in domestic gas demand.
LNG regas hit 50 million cu m on Tuesday after having been up at 59 million cu m on Monday after having averaged 26 million cu m/d for the first seven days of January.
Spanish LNG stocks have been boosted so far in January by several tanker arrivals, and started Tuesday's gas day at 1.273 Bcm of natural gas equivalent after having been down at 991 million cu m at the beginning of 2018.
LNG REGAS BEATS ALGERIAN PIPELINES IN 2017
With total annual Algerian receipts falling for a third consecutive year and LNG regas having risen during each of the last three years, Spain last year relied on LNG regas more heavily than Algerian pipeline imports for the first time since 2012.
Algerian pipeline imports were 14.511 Bcm in 2017, down 7.1% on the year and 10.3% shy of the 2014 high, but LNG regas rose by 19.3% year on year and was up almost 70% from the 2014 low to hit 15.266 Bcm in 2017.
Moreover, imports from the TRS area in the south of France rose 39.3% year on year in 2017 to reach 3.875 Bcm, as the oil-indexed pricing used by Algerian company Sonatrach became less competitive with both LNG and hub pricing, especially during the latter months of the Summer 2017 delivery period.