Norwegian gas production outpaces forecast
Natural gas produced by Norway was above forecasts for the eleventh month in a row, data from regulator Norwegian Petroleum Directorate (NPD) showed.
Norwegian offshore fields produced 9.66 billion cubic metres (bcm) of gas in July, 21% more than in the same month in 2014 and 31% more than was forecast by the NPD.
There was little in the way of unplanned outages during July and the only significant planned maintenance was on the Ormen Lange field between 4-23 July, which curtailed exports to Britain.
Despite the significant rise in Norwegian volumes, the Day-ahead contract on the British NBP and Dutch TTF – the two largest European hubs – averaged 43.474p/th and €20.854/MWh in July, 15% and 27% higher than the equivalent contracts in 2014.
However, traders generally attributed this to lower storage stocks year on year, as demand to inject supported prices in 2015.
Norway has been producing above forecast levels for almost a year. Total gas production from January to July was 65.66bcm, 11% above forecast levels.
Norwegian production can ramp up or down to respond to spot prices but generally works within a set range.
With the gas far curve falling into backwardation on the NBP, a key market for Norwegian producers. Sellers may be looking to profit from current price levels rather than risk losses in the coming years.
Statoil, the Norwegian state-owned producer who accounts for the majority of deliveries from the Norwegian Continental Shelf (NCS), said in 2014 it would defer delivering some of its 2014 volumes from the Troll field to 2015 in order to “enhance value”.
Troll is the largest producing gas field in Norway, accounting for around 30% of all gas produced on the NCS.
One trader based in Germany said his company expects demand for Norwegian volumes to remain high in light of the production cap at the Dutch Groningen field. The Dutch government has said that no more than 30bcm of gas can be extracted from the field in 2015, 24% lower than the previous 39.4bcm limit. Groningen operator NAM may particularly restrict volumes in the third quarter in order to retain flexibility in the coming winter.
This could keep demand for Norwegian gas higher than usual, as shippers look to plug any gap left by Dutch volumes. email@example.com