French H1 Feb gas exports to Switzerland drop as flows to Spain hold strong

London (Platts)--14 Feb 2018 308 pm EST/2008 GMT

French gas exports to Switzerland and onwards to Italy have dropped in the first half of February as the competitiveness of Russian gas in Italy rose, while French flows to Spain remained strong due to subdued TRS prices, S&P Global Platts Analytics data shows.

French flows to Switzerland dropped off at the start of the month and have held steady at 2.21 million cu m/d since, Platts Analytics' data showed. This comes after French exports to Switzerland held at 19.77 million cu m/d for a large part of January.

Day-ahead gas on Italy's PSV has averaged a premium over the corresponding PEG Nord contract in France of 68.1 euro cent since the start of the month, down from an average of Eur1.19/MWh for January, according to S&P Global Platts data.

French gas enters Switzerland at the Oltingue entry point linking to the Transitgas pipeline which runs to Passo Gries on the border with Italy. This pipeline also has another entry point at Wallbach connecting it to Germany.

The decline in French exports to Switzerland was partly offset by a slight increase in German flows, averaging 20.9 million cu m/d so far in February, up from 16.97 million cu m/d in January.

Italian imports via Passo Gries have more than halved for February to date, averaging 9.88 million cu m/d compared with 21.10 million cu m/d in January. Lower Passo Gries flows were replaced predominantly by higher Russian flows through Austria, which have averaged 77.93 million cu m/d in H1 February, up from 51.37 million cu m/d in January.

Current price spreads do not justify higher flows through Passo Gries, one sources noted.

"The cost of transport is high, so there no interest in increasing the flow," a trader in the Italian market said, adding that "a large VTP/PSV spread brings Russian gas into Italy, while the spread with TTF and NCG is not so convenient."

Meanwhile, French flows to Spain have remained strong through February so far averaging 13.88 million cu m/d, compared to 11.02 million cu m/d in January.

A trader in the Spanish market said PVB near-term was holding strong on the back of buying interest. "Some significant trading volume on the prompt lately, which isn't very common, so I think some players might have been caught short," said the trader.

A strong PVB coupled with subdued TRS prices meant that the PVB/TRS front-month spread for March delivery stayed strong averaging Eur1.73/MWh in February so far, from Eur2.09/MWh in January, when the front-month contract was for February delivery.

"TRS storages are quite high, so I think this explains the spread," a trader on the French side said.

--Ornela Figurinaite,

--Edited by Alisdair Bowles,

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