Summer set to bring major shift in gas flow profiles

On 1 April the six-month gas summer period will commence, which normally brings a change in the export profiles of the major producing countries.

During the summer season, maintenance work cuts the capabilities of key pieces of gas infrastructure, with some pipelines and facilities going offline completely.

It is likely that demand for pipeline gas could be restricted this year by two factors; the relative fullness of storage sites and the number of LNG vessels arriving.

Storages facilities across Europe are just under 30% full, ten percentage higher than last year. In Germany, which has the second-largest storage capacity and imports the majority of its gas, facilities are even better-stocked.

This should lead to lower overall German imports and this could have a significant impact on the export profiles of the major producers.

LNG deliveries to Britain have jumped in recent weeks and are expected to remain frequent in the next few months (see ESGM 24 March 2016). This should reduce the need for pipeline gas from Norway and the Netherlands.

Norway

According to Norwegian offshore operator Gassco, less maintenance is planned this summer than last, although this does not necessarily mean the volume impact will be lower.

The operator tends to revise maintenance listings to reflect situations on site and unplanned restrictions are frequently added throughout the summer months.

As a crude comparison, this year 18 sets of technical work are scheduled, compared to 39 the summer before.

During the six-months last year, there were more than 100 curtailments including all unplanned outages that were listed as the period progressed.

ICIS records indicate at 10:30 London time on working days during April 2015, the Norwegian delivery rate to all European entry points decreased by 121 million cubic metres (mcm)/day month-on-month to an average of 213mcm/day.

Over the entire six months of the summer last year, Norwegian exports to Europe at 10:30 averaged 262mcm/day, which is up by 37mcm/day compared to the summer before.

The Netherlands

The Dutch export profile is shaped by the production cap in place at the Groningen field, the largest in the Netherlands.

So far this gas year, output from Groningen has dropped compared to the year before, meaning the remaining permissible production for the gas year should be 9% higher (see ESGM 8 March 2016).

The Netherlands sends gas to Britain, Belgium and Germany and last year the total export rate dipped by 47% from March to April to an average of 70mcm/day.

Throughout the summer period, the country exported about 54mcm/day on average, compared to 178mcm/day during the first quarter.

This year the drop off could be higher, due to expectations that less gas will be required for injections in Germany, and in Britain due to the busy LNG schedule.

Russia

Ukraine will start the summer period with more gas in storage than in 2015, indicating the needed summer-time build in stocks will be less great than a year earlier. By the onset of winter Ukrainian tanks need to be sufficiently full so make sure there are no issues with grid pressure for the transit of Russian gas.

On the other hand, there is no deal in place for summer deliveries, with the current supply terms with Gazprom expiring on the last day of March, although this is unlikely to affect transit flows. Russian supply agreements contain links to the oil price, with fluctuations filtering in on a six to nine month lag. Last year this meant summer deliveries actually increased, as weakness in oil filtered through.

This year could be different this year, as some countries still have volumes left over as part of take-or-pay agreements. The Hungarian incumbent, for example, recently extended and renegotiated terms of its long-term deal with Gazprom, and others may look to do the same.

Maintenance on the Nord Stream pipeline, a direct link between Russia and Germany, will take place mostly in August. ben.samuel@icis.com