Browsed by
Tag: Gas

Europe’s Glutted Gas Market Braces for More Flows From Caspian

Europe’s Glutted Gas Market Braces for More Flows From Caspian

(Bloomberg) — Europe’s glutted natural gas markets are about to get a fresh source of supply after BP Plc and its partners finished a major new pipeline from Azerbaijan into southern Europe.

Loading...

Load Error

The Trans Adriatic Pipeline, or TAP, project is “substantially complete” 4 1/2 years after construction started on the 878-kilometer link, the group developing the project said on Tuesday. The partners that invested 4.5 billion euros ($5.3 billion) are now preparing for commercial operations and offering capacity to buyers.

Flows from the pipeline add to pressure on Europe’s gas distribution grid, which is struggling to absorb unusually high storage levels and shipments of liquefied natural gas, said James Huckstepp, leader of a team at S&P Global Platts analyzing the industry. The link will bring an additional 8 billion cubic meters of gas per year to Italy, and 1 billion cubic meters to Greece and Bulgaria, shifting the dynamic of a market that gets much of is supplies from Russia and the North Sea.

“TAP is a bearish factor, mainly for Southern Europe,” Huckstepp said. “It will also have an indirect impact in Northwest Europe, as it will mean less gas being exported to the south.”



map: TAP


© via Bloomberg
TAP

The pipeline starts near the Evros area of Kipoi at the Greek-Turkish border, where it is connected to the Trans Anatolian Pipeline. It traverses northern Greece and crossing Albania and the Adriatic Sea, comes ashore in Southern Italy to connect to the Italian gas network.

Trans Adriatic Pipeline AG

Completing the link is a major milestone for the European Union, which has worked for years to diversify its sources of gas supply away from Russia. While Germany is supporting Russia’s controversial Nord Stream 2 route to bring gas to the continent via the Baltic Sea, TAP as part

Read the rest
Gas Market Buys Merkel and Putin Time on Nord Stream 2

Gas Market Buys Merkel and Putin Time on Nord Stream 2

(Bloomberg) — Germany won’t need additional gas flows this season, giving Chancellor Angela Merkel and Russian President Vladimir Putin another reason to bide their time on the controversial Nord Stream 2 pipeline.

Loading...

Load Error

After two warm winters and the coronavirus pandemic, demand for the fuel used for heat and power generation is sagging across the continent. Supplies remain abundant, with U.S. cargoes of liquefied natural gas returning to Europe. Benchmark gas prices remain below their 10-year average at the start of the period for peak consumption.

Those metrics may inform how Putin and Merkel respond to Poland’s decision last week to slap a record $7.6 billion fine on the pipeline’s sponsor, Gazprom PJSC. Berlin was silent on the matter, and Russia said only that Poland aligned itself with the U.S. on the issue. For now, there’s no reason to rush ahead with the long-delayed 1,230-kilometer link under the Baltic Sea.

“There is no urgency now for Nord Stream 2 as the existing pipelines and LNG should provide enough gas for the months to come,” said Richard Morningstar, founding chairman of the Atlantic Council’s Global Energy Center and a former U.S. ambassador to the European Union.



a close up of a map: Who’s Dependent on Russia’s Gas?


© Bloomberg
Who’s Dependent on Russia’s Gas?

Nord Stream 2 will run parallel to an existing pipeline by the same name and will double capacity of the route from Russia under the Baltic Sea into Germany. Merkel allowed it to go ahead as a commercial project that would shore up fuel supplies to heavy industry including BASF AG. Russia and Gazprom started promoting the link in 2012, saying additional flows will be needed needed by the mid-2020s.

The U.S. has opposed the pipeline from the start, saying it will deepen Europe’s dependence on energy supplies from Russia. Those arguments gained traction when Putin ordered

Read the rest
Natural Gas Market: Our EOS Storage Indices Are Below Market Expectations

Natural Gas Market: Our EOS Storage Indices Are Below Market Expectations

This report covers the week ending October 9, 2020.

Total Supply-Demand Overview

We estimate that the aggregate demand for U.S. natural gas (consumption + exports) totaled around 607 bcf (or 86.7 bcf/d) for the week ending October 9 (+1.9 bcf/d w-o-w (week over week) and +1.6 bcf/d y-o-y (year over year)). The deviation from the norm remained positive and actually increased from +8.9 bcf/d to +13.0 bcf/d.

We estimate that the aggregate supply of natural gas in the contiguous United States (production + imports) totaled around 647 bcf (or 92.4 bcf/d) for the week ending October 9 (-0.9 bcf/d w-o-w and -8.5 bcf/d y-o-y). The deviation from the norm remained positive but moderated slightly from +5.7 bcf/d to +5.0 bcf/d.

Here’s our latest forecast for the next two weeks:

October 16

  • Total supply: 92.1 bcf/d (-9.9 bcf/d y-o-y)
  • Total demand: 86.5 bcf/d (-1.7 bcf/d y-o-y)

October 23

  • Total supply: 93.3 bcf/d (-9.3 bcf/d y-o-y)
  • Total demand: 91.2 bcf/d (+2.0 bcf/d y-o-y)

Thus, total balance is projected to remain tighter (vs. a year ago), ensuring that the annual storage “surplus” will continue to shrink.

Please note that these forecasts are updated daily.

Source: Bluegold Research estimates and calculations

Natural gas consumption (seven-day average) is projected to decrease by -0.3% over the next seven days (from 71.5 bcf/d today to 71.3 bcf/d on October 16). Overall, daily natural gas consumption is projected to reach a major “seasonal low” on October 10 and is then projected to trend higher (slowly), but is also currently projected to remain mostly below last year’s level (see the chart below).

At the same time, we should remember that the weather forecast can change very quickly and at any moment, so we need to be very careful during this time of the year. Natural gas is primarily a

Read the rest
Natural Gas Market: Production Falls To A New Multi-Year Low

Natural Gas Market: Production Falls To A New Multi-Year Low

The Weather

Last week

Last week (ending October 2), the number of cooling degree days (CDDs) increased by 6.9% w-o-w (from 33 to 35). At the same time, the number of heating degree days (HDDs) surged by 81.5% w-o-w (from 15 to 26). We estimate that total “energy demand” (as measured in total degree days, or TDDs) was as much as 26.5% below last year’s level but only 1.1% below the 30-year average.

This week

This week (ending October 9), the weather conditions have cooled down substantially in the contiguous United States. We estimate that the number of nationwide CDDs will drop by 20.4% w-o-w (from 35 to 28), while the number of HDDs should rise by 22.1% (from 26 to 32). Total average daily consumption of natural gas (in the contiguous United States) should be somewhere between 70 bcf/d and 72 bcf/d. Total “energy demand” (measured in TDDs) should drop by 10.2% y-o-y, while the deviation from the norm will remain in the negative territory (-8.4%).

Next week

Next week (ending October 16), the weather conditions are expected to warm up, but only slightly. The number of nationwide CDDs is currently projected to edge up by 4.2% w-o-w (from 28 to 29), while the number of HDDs should remain relatively unchanged (at 32). However, total “energy demand” (measured in TDDs) should still decline in annual terms (-24.6%), while the deviation from the norm will remain negative (-13.1%) (see the chart below).

Source: Bluegold Research estimates and calculations

The latest numerical weather prediction models (Wednesday’s short-range 00z runs) agree that, over the next 15 days, TDDs should remain below the norm (on average) but should continue to trend upward – see the chart below. However, there is currently a minor disagreement between the models in terms of scale: the latest

Read the rest