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Norwegian gas flows to UK hit second highest monthly level in November

London (Platts)--4 Dec 2017 745 am EST/1245 GMT


Exports of Norwegian gas by pipeline to the UK registered their second highest monthly level in November, with supplies reaching 3.59 Bcm according to data from Platts Analytics' Eclipse Energy, on the back of strong UK demand for Norwegian gas and weaker supplies to continental Europe.

The UK NBP hub enjoyed a widening premium for day-ahead supplies through November, with the spread on November 30 reaching Eur1.23/MWh, incentivizing Norwegian deliveries to the UK.

Norwegian gas supplies to the UK were only higher in January 2017 when they soared to 4.05 Bcm due to a prolonged cold snap and a high NBP-TTF spread.

Supplies to continental Europe dipped in November to 6.24 Bcm, the lowest level since February, according to data from Platts Analytics.

Flows were curtailed as volumes were diverted to the UK and some corrective and unplanned maintenance at a number of fields including Oseberg saw a combined 30 million cu m/d impact for part of the month.

Total flows to the UK and continental Europe reached 9.83 Bcm in November, the highest since March, but down on both the November volumes in 2015 and 2016.

Despite the year-on-year drop in November, Norway remains well on track to beat its record high exports to the UK and Europe with flows having already reached 102.1 Bcm. That puts volumes 5.5 Bcm ahead of last year.

Assuming continued strong flows through December, Norway could end the year with a new record high pipeline supply level of more than 110 Bcm.

Total pipeline supplies last year amounted to a record 106 Bcm -- on a par with exports in 2015. UK-NORWAY RELATIONS

The continued strong flow of Norwegian gas to the UK comes against the background of the UK becoming a tighter market in the winter because of the loss of the country's only seasonal storage site at Rough.

The UK government has acknowledged its growing dependence on Norwegian gas, with the UK energy ministry earlier this year saying that the UK would become more dependent on Norwegian gas imports in the future given the UK's move to phase out coal-fired power generation.

Norway has also stressed that it must be able to enter into new bilateral trade deals post-Brexit that go well beyond a traditional agreement given the deep economic integration between the two countries.

Norway is not an EU member state, but is part of the European Economic Area which allows it to take part in the EU internal market.

Oslo has said Norway must enter into new bilateral agreements with the UK when the country leaves the internal market and the EEA, including in the energy sector.

It has also said it wants to be part of any transitional arrangements between the UK and EU, and has also urged both parties to allow it a place at the negotiating table.

COUNTRY-LEVEL IMPORTS

Of all of the five direct European importers of Norwegian gas, supplies to the Netherlands again were robust in November, albeit slipping below the 2 Bcm mark for the first time since June.

Supplies amounted to 1.97 Bcm as domestic Dutch production continues to slide and demand for high-calorific gas (H-gas) grew.

Norwegian gas flows to the Netherlands hit an all-time high in August of 2.18 Bcm.

Falling Dutch production from the Groningen field -- which has had its output capped further as of October 1 to just 21.6 Bcm/year -- has increased the need for imports.

Flows in November to Norway's other European markets -- Germany, France and Belgium -- were all slightly down year on year.

--Stuart Elliott, stuart.elliott@spglobal.com

--Edited by Alisdair Bowles, alisdair.bowles@spglobal.com




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