Britain-to-Belgium gas flows likely to soar from Thursday

British natural gas exports to Belgium should restart on Thursday 30 June, and are likely to be boosted by an outage at Britain’s Rough storage facility. This should lead to a decrease in outright Zeebrugge prompt contracts and prompt bases.

Near curve Belgian prices reflected this supply expectation on Tuesday 28 June, with the July ’16 contract dropping by 0.35p/th. The front month was assessed at a 0.763p/th discount to the Day-ahead, indicating prices may fall in the coming days.

The bi-directional Interconnector pipe, linking Britain and Belgium, was shut down on 15 June for annual maintenance and is scheduled to restart at 05:00 London time on Thursday 30 June. Since 15 June, no flows have been possible through the pipe, which is typically a key driver in determining Belgian hub prices.

Thursday’s end to maintenance should see flows resume. British exports to Belgium averaged 30 million cubic metres (mcm)/day in the week following the 2015 annual maintenance.

Rough outage to boost flows

An outage at Britain’s Rough storage site on 22 June meant injections and withdrawals at the facility – which represents 70% of British storage capacity – are currently offline. British operator Centrica Storage said all operations at Rough would cease until 3 August at the earliest.

This means more gas than previously expected should be delivered to Belgium from Thursday. As British shippers will be unable to inject into the long-range storage facility during July, the surplus gas is likely to be offloaded to mainland Europe via Belgium.

A positive Zeebrugge Day-ahead basis is further indication of strong Britain to Belgium exports. The Zeebrugge Day-ahead basis – the difference between the Belgian and British hub prices – was assessed at 0.375p/th on Tuesday. Typically, a negative Day-ahead basis of -1.9p/th is required to see flows switch to the Belgium into Britain direction.

It has been seven months since the day-ahead basis was last assessed as positive. On 11 November 2015, the basis was 0.375p/th, resulting in British exports of 36mcm on 12 November, Belgian transmission system operator Fluxys data shows. Flows have not reached this level since.

Longer term, shippers are concerned British winter supply may be at risk from the Rough outage. By the time injections can restart, Britain is expected to have 1.2 billion cubic metres less gas in storage compared to last year, according to ICIS analysis.

This could result in a rise in British demand for mainland European gas to meet this supply shortfall. alex.thackrah@icis.com