A favourable spread between the German NCG and the Austrian VTP markets will ensure German natural gas exports to Austria remain high in the third quarter of 2017, according to traders.
Gas flows from Germany to Austria through the Uberackern, Oberkappel and Kiefersfelden-Pfronten border points.
In June so far, German flows through these have averaged 18 million cubic metres (mcm)/day, up by 9mcm/day compared to the beginning of the gas summer.
Volumes on the border are likely to remain high in the coming months due to a favourable spread between the Austrian and German NCG markets.
During the gas summer so far, high consumption in Italy, driven by gas-fired electricity production offsetting low hydro output, has pushed up the VTP day-ahead and widened the spread to Germany.
An originator based in Switzerland said: “I think Italy will set the pace and keep the premium wide between the VTP and the NCG.”
Between 1 April and 10 May, the VTP day-ahead closed on average €0.55/MWh above the same NCG product, with German exports to Austria averaging 7mcm/day during that time.
On 11 May, the VTP day-ahead closed €0.962/MWh above the same NCG product, with the spread pushing out and averaging €1.239/MWh between that date and 27 June.
As a result, Germany volumes delivered to Austria moved up to 18mcm/day over that period.
Looking ahead, the VTP Q3 ‘17 contract has closed more than €1/MWh above the same NCG product since late May, which should encourage high German exports for the remaining summer months.
The current level of Austrian storage stocks is expected to also play a role in cross-border flows with Germany. ICIS storage data showed that Austrian facilities were 27% full on 27 June, down by 33 percentage points year on year.
The Austria day-ahead is currently trading at a higher price than the remaining summer months, which is limiting storage injections as shippers wait for prices to fall.
With purchases for storage expected to rise in the third quarter, Austria should continue to import a large volume of gas from Germany.
Some of the Austrian fast-cycle storage units, such as the 7fields operated by Uniper or Haidach run by Astora, are well-connected to the German gas network, making import and injection an easy option for shippers.
Volumes in these facilities are important for shippers in the NCG market area in times of high German demand. email@example.com