Corrected: Interconnector set for highest summer gas flow since 2003

05 May 2017 07:11 Source:ICIS
A natural gas pipeline

(The volumes in the fourth paragraph have been corrected.)

British natural gas exports to Belgium may be hit by a withdrawal restriction at the island’s Rough storage site, beginning 11 May. But longer-term, summer 2017 forward prices suggest Britain will send its largest volume of gas to the continent since 2003.

Since the start of March, Britain has consistently been exporting gas to Belgium, while since the beginning of April flows have really ramped up, averaging nearly 40 million cubic metres (mcm) per day.

This is in part because shippers have been withdrawing large volumes of gas from Rough ahead of a withdrawal capacity restriction, and offloading much of this length to continental Europe. A lack of storage injection capacity at the beleaguered facility, resulting in system oversupply, is the other key driver.

Since 22 April, shippers have withdrawn an average of 11mcm/day from Rough, compared to just 3mcm/day in the first 21 days of the month.

Operator Centrica announced no withdrawals from Rough will be possible after 05:00 on 11 May, meaning shippers should thereafter push less gas to Belgium.

But longer term, a restriction on storage injections at Rough should mean that Interconnector flows remain elevated until the fourth quarter of 2017.

This assertion is supported by forward prices. The July, August and Q3 ’17 Zeebrugge bases were assessed between 0.00p/th and 0.13p/th on 3 May. A basis of higher than -1.80p/th is an indication that shippers will flow gas from Britain to Belgium, while a positive basis, as above, suggests Britan-Belgium exports will be at an extremely high level.

Record-breaking flows

The Interconnector pipe has a maximum technical capacity of around 60mcm/day in the Britain-Belgium direction. The maximum recorded daily flow was 59.95mcm on 8 April 2011, responding to the previous session’s Day-ahead basis of 1.00p/th.

Last August, following the initial Rough injection restriction announcement in June, flows peaked at 57.82mcm, responding to a basis of 2.25p/th.

With Summer ’17 and associated bases trading well into positive territory, it seems likely that these record-breaking flows could be matched and gas flowed through the Interconnector pipe at near-maximum capacity at times this summer.

If the 1 April to 3 may flow rate is maintained for the rest of the gas summer, Britain will send 7.13 billion cubic metres (bcm) of gas to Belgium.

This figure has been surpassed just once since the pipe began operations in 1999. This was in the gas summer of 2003 when net exports totalled 8.69bcm.

By Alex Thackrah