Norwegian gas deliveries climb on European price hike
Norwegian pipeline gas flows to Europe have risen in recent days, partly offsetting slower LNG sendout, as European prompt prices jumped.
Aggregate Norwegian exports to Europe averaged 274.9mn m³/d between 1 August and this afternoon, up from 265.5mn m³/d on 26-31 July. Maintenance on Russian state-controlled Gazprom's 55bn m/yr Nord Stream pipeline had reconfigured flows across Europe on 14-25 July.
Deliveries were up to most markets, but the rise was largely driven by stronger flows to Emden and Dornum, where gas can enter the German markets or Dutch grid. Combined deliveries to the two points were up to 144mn m³/d from 138.8mn m³/d (see Norwegian deliveries graph).
A sharp rise in northwest European prompt prices may have encouraged deliveries to step up.
The average Dutch TTF everyday market rose to €6/MWh on 1-7 August from €4.66/MWh on 26-31 July, moving as high as €6.95/MWh today — its highest for any day since 15 April.
The brisk rise at the front of the curve outpaced gains further out, which may have driven quicker Norwegian sales. Daily Norwegian exports to Europe have been highly responsive to TTF everyday-summer 2021 spreads so far this summer. And the TTF everyday-summer 2021 spread averaged minus €5.725/MWh on 1-6 August, in from minus €6.48/MWh on 26-31 July. The differential held as tight as minus €5/MWh on 4 August, the narrowest for any day since 15 April (see TTF, NBP everyday-summer 2021 spreads graph).
In contrast to the rise in Norwegian receipts, Russian deliveries remained broadly unchanged from late last month, as physical deliveries to Slovakia through Ukraine dropped (see European supply graph).
A sharp increase in exports to Ukraine — driven by higher backhaul from Slovakia — left less gas arriving physically at the Ukrainian border. Most of the rise in eastward flows appeared to be fed with gas sent to Germany through the Yamal-Europe and Nord Stream pipelines. Deliveries to Mallnow climbed sharply from the start of the month, with receipts at the Polish border further upstream at Kondratki approaching the line's capacity.
Some of this gas arrived in the Czech Republic, with onward deliveries to Slovakia rising to 836 GWh/d on 1-6 August from 511.7 GWh/d on 26-31 July. And much of it was delivered on to Austria and Italy, partly as a result of maintenance on the Transitgas pipeline, which curbed Italy's northwest European receipts. The restrictions halted deliveries at Wallbach on 3-5 August, over which Baumgarten receipts climbed sharply (see Mallnow to Baumgarten flows graph).
Nominated Russian deliveries to Slovakia in transit through Ukraine remained broadly unchanged, although physical deliveries fell as shippers backhauled more gas to Ukraine at Velke Kapusany. Gazprom may have maximised its booked capacity through Ukraine, as well as physical capacity through Nord Stream and Yamal-Europe, and may have been unwilling to book additional capacity on a day-ahead basis in order to lift deliveries further (see Gazprom capacity graph).
In contrast, Norwegian deliveries to Emden and Dornum have moved well above combined booked firm and interruptible entry capacity at both points. Shippers have taken up capacity on a short-term basis at both points in order to lift their Norwegian take as prompt prices rose (see booked capacity vs flows graph).
Sendout slip centred elsewhere
Europe's aggregate LNG sendout slipped early this month, at least partly offsetting the rise in Norwegian pipeline receipts, although the decline was concentrated in Italy and Spain.
Combined European sendout slipped to 2.12 TWh/d on 1-5 August from 2.32 TWh/d on 26-31 July and 2.49 TWh/d in all of July. But sendout from UK, Dutch, Belgian and French terminals rose to 711 GWh/d from 697 GWh/d on 26-31 July, climbing as high as 806GWh on 5 August (see regional sendout graph).
In contrast, Italian and Spanish regasification fell by a combined 259 GWh/d.
A sustained rise in prompt prices could encourage northwest European sendout to increase further. But prompt prices still holding at a wide discount to the corresponding September contracts may encourage some firms to preserve their LNG stocks in order to maintain flexibility to ramp up sendout in late summer, especially in markets such as Spain, where LNG stocks account for a large share of stored gas.
But extensive upstream maintenance could pare Norwegian gas available for export towards the end of the month and into September. This could require other sources of supply to step up, unless injection demand or consumption recedes.
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Polish gas reforms still needed: Energy Traders Europe
Polish gas reforms still needed: Energy Traders Europe
London, 15 July (Argus) — Recent government plans to amend Poland's onerous gas storage legislation are positive, but more serious reforms are necessary to foster increased competition, industry association Energy Traders Europe told Argus . The Polish government last month said it plans to amend the Act on Stocks in November , removing importers' obligation to maintain mandatory gas storage reserves and placing it on state-owned strategic reserves agency Rars instead. Energy Traders Europe welcomed the move but recommended several further steps to bolster competition and liquidity. The Act on Stocks "needs to be revised first and fast" before addressing other issues in the market, the association's gas market manager, Pawel Lont, told Argus . While shifting the obligation to Rars is a positive first step, Poland would still have "state-enforced storage filling with hardly any capacity left for commercial use", which removes an important flexibility source for the market, he said. Ultimately, storage needs to be reformed to a point at which commercial filling becomes not only possible but desired, Lont said. The government needs to ensure that the system provides an incentive for the storage operator to offer products that are attractive to users, Lont said, noting that currently "this incentive simply does not exist, and this set-up can only inflate the costs of gas consumption in Poland". Energy Traders Europe previously suggested that the strategic reserve should be calculated against the demand of vulnerable customers only, as opposed to all consumers, which would significantly reduce the overall burden and free up space for commercial use. It would also be desirable to move the start date of the draft storage legislation to 1 April 2025 and ensure that licence applications declaring the intention to start commercial activity after this date are tested for compliance with these new rules. It can take a year or more for licence applications to be approved, so "the sooner we start, the better", Lont said, adding that the licensing procedure in Poland is "undoubtedly the most problematic in all of Europe". Applications involve a long list of documents that are difficult to complete in a timely manner. There are also issues on the reporting side, with "an impressive list of 20+ positions reported to different bodies at different points in time" on top of standard EU reporting, Lont said. These obligations create exposure and considerable costs for companies, so it would be beneficial to run a critical review on their necessity, he said. And Polish transmission tariffs are high, although this is understandable given Gaz-System's construction of interconnectors with several neighbouring countries over the past few years. Polish tariffs are decided yearly, while entry/exit splits can also be adjusted, which is problematic for trading companies that would like to book longer-term products. The multipliers and seasonal factors "definitely deserve some rethinking as they severely inflate the costs of short-term capacity products, while booking yearly products in Poland can be quite a bet", he said. But even if these other issues are addressed, "We will [still] be looking at a largely monopolised country, with the dominant player having exclusive access to LNG terminals", Lont said. While the gas release programme is positive for the market, it would be beneficial to see whether Orlen's dominance could be challenged at import terminals. Orlen has booked all capacity at the Swinoujscie terminal, as well as at the planned Gdansk terminal, meaning it continues to be the sole beneficiary of the 100pc discount on entry to the grid from LNG terminals. Several measures could be taken to open other companies' access to the terminals, such as secondary capacity trading, use-it-or-lose-it rules or set-aside rules and limits when allocating capacity to a single entity, Lont said. But these measures would be ineffectual without a guarantee that other firms are ready and willing to book this capacity, so the reforms discussed above need to come first so as to ensure that these participants can actively trade in Poland beforehand, Lont said. In general, it is not unusual to have a dominant company in a given country, but "one just needs an environment in which the group cannot abuse its position and its offer can be challenged", he said. Orlen had a 91pc share of the Polish retail market last year, according to regulator URE. Poland has "all the cards" to develop a liquid gas market, but this takes time, so reforms must get going as soon as possible. Since the change of government, it has at least become "much easier to approach the ministries in Poland", which "helps a great deal on the transparency side", Lont said. By Brendan A'Hearn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Singapore LNG bunker sales post fresh highs in June
Singapore LNG bunker sales post fresh highs in June
Singapore, 15 July (Argus) — Demand for alternative marine fuels rose further in June at the port of Singapore, with LNG demand for bunkering touching fresh highs. Total bunker sales in June rose by 8.7pc from a year earlier to 4.27mn t, according to preliminary data from the Maritime and Port Authority of Singapore (MPA), lifted by a 2.7pc increase in vessel throughput in Singapore to around 10.11mn in June. But sales slipped by 11pc from a strong May. "It is [lower] LNG prices versus fuel oil prices, along with higher fuel demand, due to the longer passage through the Cape, [and] that is playing an important role," said a key Singapore-based LNG bunker supplier, referring to the increased demand from the rerouting of vessels because of attacks on shipping in the Red Sea region. Demand for bunkering LNG has increased this year, with Singapore recording 175,030t of LNG used to fuel ships in the first half of this year. This is more than a threefold increase from the same period last year when 36,900t of LNG was bunkered in Singapore. Demand for biofuel blends in the first half increased by 46.7pc versus the same period last year. January-June sales were 280,160t compared with 191,000t a year earlier. The blend of 76pc very-low sulphur fuel oil (VLSFO) and 24pc used cooking oil methyl ester, also known as B24, has been the first choice of alternative fuel among shipowners in Singapore, partly because of its drop-in character. Increased enquiries emerged for B24 in Singapore since April-May this year, with short-term tenders going to key shipowners planning voyages to Europe. "There are customers taking more volumes in H2 2024. Volumes wise [for the year, this] might not see a huge increase [but we] will just see more customers," said an international trader. Consumption of conventional bunker fuels has remained largely steady in Singapore, with the exception of high-sulphur fuel oil (HSFO) where sales for June rose by 26pc compared with a year earlier to 1.56mn t. There was a 29pc increase for January-June this year against the 2023 equivalent. Firmer demand has continued for lower priced HSFO, particularly for vessel owners hoping to maximise the use of installed exhaust scrubber systems in handling alternative marine fuels. VLSFO consumption was down by 2pc in the first six months of 2024 versus the same period in 2023, with overall demand largely unchanged. Supplies have been higher in Singapore from this year's second quarter, which is expected to remain in the short term, said industry participants. Red Sea diversions Singapore has absorbed 40pc of the increased demand created by the Red Sea disruptions, data from the International Bunker Industry Association show. Demand in Singapore rose to 4.62mn t/month in this year's first quarter from 4.23mn t/month in 2023. Container terminals in Singapore were congested in the first half of the year because of Red Sea voyage rerouting. Container throughput at the city-state grew by 6.4pc from a year earlier in the first half of 2024 to 20.25mn 20ft equivalent units (TEUs) by June, according to the MPA. Singapore in May recorded a 7.7pc year-on-year increase to 16.9mn TEUs, said Singapore's transport minister Chee Hong Tat. Tonne-mile demand for tanker vessels is expected to grow this year. Greek crude tanker owner Okeanis Eco Tankers forecasts tonne-mile demand to grow by 5.6pc in 2024 and by a further 5.5pc in 2025. By Cassia Teo, Sean Zhuang and Mahua Chakravarty Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australia’s Snowy, Lochard ink Iona gas storage deal
Australia’s Snowy, Lochard ink Iona gas storage deal
Sydney, 15 July (Argus) — Australian state-owned utility Snowy Hydro has signed a 25-year deal to store gas at the country's largest domestic gas storage in Victoria state to support its gas-fired power stations. The agreement with the 26PJ (694mn m³) Iona site, owned by domestic gas storage firm Lochard Energy, will commence in January 2028. This will be ahead of the permanent closure of the 1,480MW Yallourn brown coal plant, operated by Hong Kong-owned utility EnergyAustralia, in mid-2028. "The gas storage agreement with Lochard Energy will support the operation of our gas-fired power stations in Victoria," Snowy Hydro chief executive Dennis Barnes said on 15 July. Snowy Hydro, which owns and operates three gas-fired power stations totalling 1,290MW at present, is building the 750MW Kurri Kurri gas-fired plant , of which the initial 660MW stage is scheduled to come on line in late 2024. Snowy's 320MW Laverton North and 300MW Valley Power generators are located in Victoria. The deal is expected to underwrite the Heytesbury underground gas storage project , Lochard's chief executive Tim Jessen said, which will expand the capacity of Iona by approximately 3PJ. Australia's southeastern states are expected to face significant shortfalls of gas later this decade as fields supplying Victoria's 1,150 TJ/d (30.7mn m³/d) Longford gas plant deplete. A mixture of pipeline expansions to bring more gas south from Queensland state, LNG import terminals, and reducing demand have been floated to bridge this gap. Two LNG import terminals are proposed for Victoria but both require environmental approvals from the state government. Snowy Hydro is facing significant pressure from the federal government over its delayed Snowy 2.0 pumped hydroelectric project, which has suffered significant cost overruns and delays. Snowy last year said the scheme's costs had doubled to A$12bn ($8.1bn) from a previous A$5.9bn estimate , which was itself higher than the original guidance. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Gas struggles hinder Brazilian industry: Study
Gas struggles hinder Brazilian industry: Study
Sao Paulo, 12 July (Argus) — A lack of natural gas supply is hindering 9pc of Brazil's industry, according to a study conducted by the country's industry confederation (CNI). According to CNI, 14pc of the Brazilian industry uses natural gas in its production processes, with 9pc reporting some sort of supply issue in the last 12 months. The study also showed that 10pc of industry have limited access to energy in general. Among those who do not use natural gas in the production process, 10pc point to the lack of access to energy as the main reason for choosing another energy source, 8pc blame the lack of distribution infrastructure, such as gas pipelines, and 5pc said prices are too high. The study provides some insight to the industry, but it may not paint the most accurate picture, given that gas usage is more intense in some specific sectors, CNI's energy policy and industry expert Rennaly Patricio Sousa said. Brazil's south holds the heaviest natural gas users in the country and its regional federations have been very active in advocating for a more competitive gas market. "The attraction of new investments to the south is related to the availability of gas," Santa Catarina state's industry federation president Glauco Jose Corte said on 10 July during an industrial forum. "Therefore, we need to discuss improvements in transport infrastructure, supply strategies, the entry of new players and the role of regulatory agencies." CNI's study makes it clear that low competition in the natural gas sector holds back both industry and consumers, making the Brazilian product more expensive and less competitive. Hence, lowering the price of natural gas is important to increase investments and revenues in sectors that are very dependent on it, such as the petrochemical industries, steel, ceramics, glass, aluminum and mining, the report said. The 2021 new gas law made room to reform the sector, but the market remains very concentrated, Sousa said. "So opening up the gas market is a good bet to help resume growth in the industry that consumes about 60pc of this energy." By Betina Moura Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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