European pipeline imports post ninth month of growth

05 July 2017 06:00 Source:ICIS
Political winds batter new pipeline project

Pipeline natural gas flows to Europe recorded a ninth consecutive month of annual growth as increased supply from Russia and Norway offset declining imports from North Africa in June.

A total of 23.5 billion cubic metres (bcm) was imported to Europe via pipeline in June, according to grid operator data collected by ICIS. This was the lowest volume since the start of the gas year, but up nearly 1% on June 2016.

Norwegian supply rose by 0.6bcm despite planned maintenance, although a 1bcm increase in Russian flows was the key driver of the annual increase. This helped to offset a 1.4bcm drop in supply from North Africa.

Send-out of regasified LNG fell from the near five-year high recorded in May to 3.8bcm, but was still up 21% compared to June last year. Total supply of 27.3bcm from pipeline imports and LNG send-out was up more than 3% or 880 million cubic metres (mcm) year on year.

This was more than enough to cover a 2% – 173mcm – drop in domestic gas production across Europe to 7.4bcm, suggesting a year- on-year increase in gas demand in June.

Russia

Russian supply via Germany, Ukraine and Poland increased by 8% year on year in June to 13.4bcm, accounting for 57% of pipeline imports to Europe.

Russian flows were driven higher by deliveries via Ukraine to Slovakia, which rose by 25% to 4.6bcm. Nord Stream flows to Germany totalled 3.7bcm and were up 4%, while exports to Hungary and the Balkan states grew by 9% to just over 1bcm.

Russian deliveries to Turkey fell by 1% compared to June last year to 850mcm and supply to Poland was down 16% at 3.1bcm.

Russian deliveries to Poland in the first half of 2017 were down 1%, while supply directly to Germany and via Ukraine to Slovakia, Turkey and Hungary and the Balkans recorded increases of between 12-38%.

The small 218mcm drop in supply to Poland was offset by regasified LNG send-out, which more than tripled to 913mcm in the first half of 2017.

Russian supply in the first half of the calendar year was up by 13% (9.3bcm) on the same months of 2016 at 83.5bcm and remains on course to exceed last year’s 153bcm total.

Norway

Despite planned maintenance and export capacity restrictions in June, Norwegian supply to Europe rose by 8% year on year to nearly 8bcm. Deliveries in the first half of the year were nearly 1% higher than in 2016 at 56.6bcm.

Flows to all markets except Britain were up, as Norwegian supply was rerouted due to the Rough outage and the two-week Interconnector maintenance period which fully restricted British exports to mainland Europe.

A two-year low 1.5bcm was delivered via British entry points, accounting for just 19% of total Norwegian supply to Europe; a near three-year low share.

The Emden grid point on the Dutch/German border and the Dunkirk entry point in France saw the biggest year-on-year increase in supply, rising by 28% and 38% respectively to 2.1bcm and 1.3bcm.

Deliveries to the German Dornum point and the Belgian Zeebrugge point were both up 8% at 1.8bcm and 1.2bcm respectively.

Britain received 9% (1.4bcm) more gas in the first half of the year – largely at the expense of flows to the Dutch/German border – due to increased supply in the peak-demand first quarter. The trend is likely to reverse in the third quarter, with mainland European storage sites in need of replenishment and Britain unable to absorb gas due to the outage at Rough.

North Africa

North African pipeline supply to Europe fell 1.4bcm to just shy of 2.2bcm in June due almost entirely to reduced Algerian flows, which slumped to a 15-month low.

Receipts from Libya were almost unchanged year on year at 380mcm.

North African pipeline supply to Europe was up 1.4bcm year on year in the first half of 2017, with Algerian exports rising 10% to 17.2bcm and Libyan flows dropping 3% to 2.2bcm. Over 38bcm was delivered in the 2016 calendar year. jake.horslen@icis.com

By Jake Horslen