BBL gas capacity sells as NBP opens premium

: Natural gas
17/11/06

BBL natural gas pipeline capacity was bought at auction today for January-March, after the UK's NBP first-quarter 2018 contract moved to a sufficiently wide premium to the Netherlands' TTF.

Shippers booked 14.4 GWh/d of firm entry capacity for delivery to the Bacton terminal, well below the 193 GWh/d on offer. There has previously never been any demand for short-term BBL bookings.

BBL capacity was mostly fully subscribed with long-term bookings until December last year, when Dutch firm Gasterra's contract to supply UK utility Centrica expired, alongside the corresponding pipeline space.

Short-term BBL capacity bookings were not required last winter, as other sources of supply stepped up during cold periods. The Interconnector link is fully booked until October next year — this subscribed capacity is considered a sunk cost.

But the NBP first-quarter 2018 market's premium to the TTF has exceeded 4p/th, which could be enough to cover most of the costs of booking quarterly capacity.

The cost of exporting to the UK through BBL will fall from 1 January, when the Julianadorp exit fee is removed and the pipeline is integrated into the TTF market area. UK regulator Ofgem approved the tie-up at the end of September.

The integration should improve arbitrage opportunities between the NBP and the TTF, and reduce the need for Dutch system operator GTS to take balancing action.

Capacity on the BBL route was auctioned for the first time at just Bacton on the Prisma platform, rather than at Julianadorp as well. There was no uptake of quarterly BBL capacity for April-September in today's process.

BBL costs from Netherlands to UK*
	€/MWh	p/th

Total	1.715	4.442
BBL day-ahead in Jan-Feb 17	0.788	2.039
BBL commodity charge	0.109	0.282
UK commodity charge winter 17	0.695	1.800
Bacton entry fee	0.124	0.320
*exchange rate €1/£0.883639

NBP-TTF first-quarter 2018 basis p/th

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

25/05/05

Australia re-elects renewable-focused Labor party

Sydney, 5 May (Argus) — Australia's Labor party has been voted in for another term in a landslide majority, reaffirming the party's targets on renewable energy and emissions reduction. The election held on 3 May saw overwhelming support for the incumbent Labor government led by prime minister Anthony Albanese, which prioritised renewable energy, compared to the opposition's plans to install nuclear plants to replace coal-fired power . Labor now face pressure to meet key energy policy targets, including 82pc renewable energy in electricity grids by 2030 and a 43pc reduction in greenhouse gas emissions on 2005 levels by 2030. The government said late last year that Australia was on track to reduce emissions by 42.6pc by 2030 , nearly within the target and rising from previous estimates of 37pc in 2023 and 32pc in 2022. This was mostly because of the reformed safeguard mechanism , the expanded Capacity Investment Scheme (CIS) and the fuel efficiency standards for new passenger and light commercial vehicles. Lobby groups now expect the government to set a strong 2035 emissions reduction target , within the range of 65-75pc below 2005 levels indicated last year by the Climate Change Authority (CCA). The CCA is yet to formally recommend a target, and the government will then need to make a decision and submit Australia's next Nationally Determined Contribution (NDC) under the Paris Agreement later this year. In metals, a plan to buy critical minerals from commercial projects and keep stockpiles to steady prices by withholding or releasing stock will now be pursued by the re-elected government. The previous Albanese government was not forthcoming in meeting calls for a biofuels mandate or production incentives but it announced it would allocate A$250mn ($162mn) of its A$1.7bn Future Made in Australia innovation fund to low-carbon fuels (LCLF) research and development in March. In agriculture, a planned ban on live sheep exports will go ahead by 1 May 2028 under laws passed last year. The coalition campaigned heavily to revoke the laws, but the re-election of Labor has raised concerns in the live export sector. By Grace Dudley Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Mexico bets on new contract model to lift gas output

25/05/02

Mexico bets on new contract model to lift gas output

Mexico City, 2 May (Argus) — Mexico's push to raise domestic gas output to 5 Bcf/d by 2030 depends on a new shared participation model designed to attract private investment, with four strategic gas fields prioritized as tenders begin. State-owned Pemex this week released the detailed guidelines for the mixed production scheme, first introduced in February. The model guarantees Pemex at least a 40pc share of production and gives the company wide discretion to set contract terms and choose the bidding process — including no-bid awards. But interest in the new contracts is expected to center on Mexican firms with close ties to President Claudia Sheinbaum's administration, such as Carlos Slim's Grupo Carso, according to market sources. "With these guidelines, Pemex can finally pick and choose who they want, how they want," said Miriam Grunstein, a former adviser to energy regulator CRE and senior partner at Brilliant Energy Consulting. "The downside is they are likely to turn to Mexican firms that lack the technical experience for complex projects, rather than international companies with the know-how for deep-water or unconventional plays," Grunstein said. "This scheme isn't made for companies like BHP, Total, or Eni," added Eduardo Prud'homme, former technical director at Cenagas and co-partner at consultancy Gadex. "Pemex doesn't want operators as partners. Though it is perfect for Carso." A relative newcomer to the upstream sector, Carso is one of the government's most important contractors for infrastructure projects and stands to gain on future business whether or not the upstream partnerships succeed. Prud'homme doubts international majors looking for a one-off deal would be willing to take on the heavily regulated, high-risk projects when the maximum stake is 60pc. "If you fail, Pemex will not share the loss," said Prud'homme. "If you succeed, Pemex decides how much to share." Pemex management said it plans to launch 17 projects under the new scheme this year. It remains unclear how many of these will focus on gas development. Still, gas is a core focus. Pemex's 2025–2030 business plan allocates Ps238bn (US$12.1bn) to gas projects in pursuit of the 5 Bcf/d goal. Four key fields — Burgos, Quesqui, Ixachi and Bakte — are expected to provide 54pc of total projected output. Carso is already active, partnering with Pemex on the complex deep-water Lakach gas project, which is now expected to migrate from a service contract to the new mixed contract model. Slim began renegotiations in February after the model was announced. Carso has also expanded upstream, buying into the oil-rich Zama project in December. In March, Sheinbaum confirmed the government is in talks with Carso to partner on Ixachi. Turning the tide Still, gas output continues to decline. An analysis by Mexican think tank IMCO found that Pemex and its farmout partners this year posted their lowest first-quarter gas production in 15 years. In the first quarter, Pemex produced 4.408 Bcf/d of gas, down by 8pc from the same period in 2024 and 12pc lower compared with the same quarter 2023. The 367 MMcf/d annual decline marks the steepest first-quarter drop since 2018, when output fell by 536 MMcf/d year over year. On the positive side, Pemex's natural gas production in March ticked 0.3pc higher from the previous month to 4.39 Bcf/d – marking the second consecutive month of increases after February output was up 1.3pc from January. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Shell says can deliver solid returns below $50/bl

25/05/02

Shell says can deliver solid returns below $50/bl

London, 2 May (Argus) — Shell can pull on several levers to maintain shareholder returns in a sub-$50/bl oil price environment, including adjusting capital expenditure (capex), chief financial officer Sinead Gorman said today. Shell is facing questions about contingency plans for lower oil prices after Ice Brent crude futures briefly dipped below $60/bl in intraday trading earlier this week for only the second time in more than four years. Oil prices are not only under pressure from weakening global economic growth prospects due to US import tariffs, but also from the Opec+ group's decision to bring back production faster than previously flagged. At $50/bl, Shell's commitment to return 40-50pc of its cash flows to shareholders would mean $8bn/yr of dividends and $6bn-7bn/yr of share buybacks, while only having to pull back "a little bit" on capex, Gorman said. In a $40/bl oil price environment, Gorman expects Shell's operating cash flow to still cover the $8bn/yr in dividends. "But of course, for us, the important thing is to be able to try and maintain the buyback for as long as we can," she said. At these lower oil prices, Shell can make use of its comparatively strong balance sheet to support share buybacks. Shell's debt gearing remained below 19pc at the end of the first quarter despite the company increasing its net debt during the period. "Are we comfortable leaning on the balance sheet? Yes," chief executive Wael Sawan said. The balance sheet has been positioned so it can be used to generate shareholder value, "whether that shareholder value is best created through more buybacks, or whether that shareholder value is created through an inorganic [investment] or the like", he said. For now, Shell is sticking to its $20bn-$22bn capex budget for 2025 and expects to carry on with planned investments in projects and other commitments. But the company has demonstrated in the recent past "a strong ability to be able to pull many levers" should oil prices fall futher, Gordon said, referencing the reduction in capex to below $18bn during the Covid pandemic. "So, the flex is there, but that's not the position we're in at the moment. We don't need to do that and we see great opportunities for value," she said, pointing to the company's announcement earlier this year that it is raising its stake in the Ursa oil project in the US Gulf of Mexico. Earlier today, Shell said it is maintaining its quarterly dividend at 35.8¢/share and will continue to buy back its shares at a rate of $3.5bn/quarter, despite a 35pc drop in its first-quarter profit to $4.8bn. By Jon Mainwaring Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Shell’s 1Q European gas production up

25/05/02

Shell’s 1Q European gas production up

London, 2 May (Argus) — Shell's European gas production for sale in January-March slightly stepped up on the year, but the company expects works to limit global oil and gas production this quarter. Shell produced 24.9mn m³/d in the first quarter, up from 24.8mn m³/d a year earlier but below the 25.2mn m³/d in fourth-quarter 2024. Shell has stakes in UK and Dutch fields, as well as a 17.8pc share in Norway's Ormen Lange field and an 8.1pc stake in the giant Troll field. Output from the two Norwegian fields was down on the year in January-February, the latest months for which data are available. Ormen Lange produced 19.8mn m³/d in January-February, down from 22.6mn m³/d a year earlier. Troll production averaged 123.6mn m³/d over those two months, also down from 126.2mn m³/d a year earlier. Shell's integrated gas business was the company's top performing segment with profits of $2.8bn, slightly higher on the year. Lighter maintenance at the Pearl gas-to-liquids plant in Qatar supported production, but unplanned works and weather constraints in Australia left the company's LNG volumes at 6.6mn t in January-March from 7.6mn t a year earlier, Shell said. Meanwhile, Shell's upstream division posted $2.1bn in profit, down 8.5pc on the year earlier but double compared with the fourth quarter 2024. The segment was hit with a $509mn tax bill related to the UK's Energy Profits Levy in the first quarter, partially offset by gains from asset sales. Across the entire company, Shell reported first-quarter profits adjusted for inventory valuation effects and one-off items of $5.6bn, surpassing analysts' expectations of $5.3bn . Shell's first-quarter worldwide oil, liquids and gas production was 2.84mn boe/d, down from 2.91mn boe/d a year earlier but up from 2.82mn boe/d in the previous quarter. The company expects lower oil and gas production this quarter in a 2.45mn-2.71mn boe/d range because of maintenance across its integrated gas portfolio and an absence of volumes from its SPDC business in Nigeria, which Shell sold off in March. By Aleksandra Godlewska and Jon Mainwaring Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Shell’s 1Q profit falls but beats expectations

25/05/02

Shell’s 1Q profit falls but beats expectations

London, 2 May (Argus) — Shell's Integrated Gas business segment delivered a solid performance in the first quarter, helping the UK major exceed analysts' earnings estimates despite ongoing struggles in its downstream Chemicals and Products business. Shell reported a first-quarter profit of $4.8bn, down from $7.4bn a year earlier. Adjusted for inventory valuation effects and one-off items, profit was $5.6bn, surpassing analysts' expectations of $5.3bn. Integrated Gas was Shell's top-performing segment, with a profit of $2.8bn, slightly higher than the first quarter of 2024. Production was down by 6.6pc year-on-year at 927,000 b/d oil equivalent (boe/d), but up 2pc from the previous quarter. Less maintenance at the Pearl gas-to-liquids plant in Qatar had a positive impact on production, Shell said. But the company's LNG volumes were affected by unplanned maintenance and weather constraints in Australia, falling to 6.6mn t from 7.6mn t a year earlier. The Upstream segment posted a profit of $2.1bn, down by 8.5pc on a year earlier but double what it made in the fourth quarter of 2024. The segment was hit with a $509mn tax charge related to the UK's Energy Profits Levy in the first quarter, partially offset by gains from asset sales. Production for the segment was slightly down compared to a year earlier at 1.86mn boe/d, partly due to the divestment of Shell's SPDC business in Nigeria. Overall, Shell's first-quarter production was 2.84mn boe/d, down from 2.91mn boe/d a year earlier but up from 2.82mn boe/d in the previous quarter. Shell expects lower production in the current quarter, ranging from 2.45mn boe/d to 2.71mn boe/d due to maintenance across its Integrated Gas portfolio and the absence of volumes from the SPDC business. The Chemicals and Products segment reported a $77mn loss for the first quarter, compared to a $1.3bn profit a year earlier. Refinery runs were down by 4.8pc year-on-year, and chemicals sales volumes were marginally lower. Despite persistent low margins in the downstream, Shell noted that refining and chemicals margins improved compared to the fourth quarter. Shell expects capital spending for 2025 to be within a $20bn-$22bn range, in line with last year's spending. The company is maintaining its dividend at 35.8¢/share and its share buyback programme at $3.5bn a quarter. By Jon Mainwaring Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more