• Russian piped imports sink to 17-month low
• Yamal LNG unloads set to pick up in the second quarter
• Groningen production clarity due end-March
Europe’s pipeline natural gas imports fell 2% year on year in February 2018 to 25.7 billion cubic metres (bcm), according to grid operator data collated by ICIS.
Russian deliveries to European entry points dropped 4% to 12.7bcm, their lowest monthly level since September 2016. Piped imports from Norway and Libya also declined.
Russian flows via Slovakia’s Velke Kapusany point were subdued for the second consecutive month, totalling 2.4bcm, down 39% compared to February 2017. Low Italian demand – due to above average temperatures during the first half of February - was the main driver behind these lower flows. High storage withdrawal rates and bumper imports from Algeria and northern Europe also reduced the need for Russian gas.
Much of the Russian gas delivered into Slovakia is destined for the Italian market after being transited through Austria.
Similarly, Russian piped supply to the Balkans and into Hungary fell 9% year on year to 1.29bcm.
Shippers in the region have drawn heavily on storage rather than piped imports this winter due to massive storage injections last summer.
But Russian deliveries into Turkey (via Ukraine), into Poland and via Nord Stream all rose in February. Imports via Nord Stream were particularly strong at 4.6bcm – up 27%. Nord Stream flows have exceeded 4.5bcm each month since October 2017, after supplier Gazprom re-routed volumes that were previously being sent via Ukraine.
There is some uncertainty over future Russian deliveries to Europe, after Gazprom started the procedure to terminate its supply and gas contracts with Ukraine’s Naftogaz, a year ahead of expiry. But flows are not expected to stop in the near future.
Yamal LNG deliveries
Russian LNG exports to Europe look set to pick up in the weeks ahead as the end of the East Asian winter reduces demand in key end-user markets of Japan and South Korea.
An end-of-February cold snap across Europe drained gas storage and LNG terminal inventories , which should act as an additional incentive for shippers to bring in spot deliveries from Yamal.
Since starting up at the end of 2017, most Yamal cargoes have been reloaded in Europe and sent on to higher priced markets.
The overall share of LNG in the European gas supply mixed remained stable at 8% in February, but total send out from terminals dropped 5% year on year to 2.9bcm.
A ramp up of US LNG exports in the second quarter of 2018 could also boost LNG activity in Europe. The US’ second export facility at Cove Point exported its inaugural cargo on 2 March, according to shipping platform LNG Edge.
European pipeline imports from Norway were curtailed by outages in February, with deliveries to the UK falling 3% year on year to 3.5bcm. Supply to Germany and the Netherlands also dropped, but piped flows to France rose 6% to 1.48bcm.
Northern France was particularly badly hit by the late cold snap as storage sites in the PEG Nord zone were at very low levels.
Europe’s domestic gas production fell 5% in February to 9.7bcm, providing 25% of total EU gas supply. A decision on future output from the Dutch Groningen development - Europe’s largest onshore gas field – is expected to be made later this month. Dutch economy minister Eric Wiebes is taking advice from energy regulators and grid operators before making his address at the end of March.
A flurry of gas extraction related earthquakes at the start of 2018 have led to renewed calls to reduce permitted production limits from Groningen. firstname.lastname@example.org