European natural gas tumbles as Norwegian supplies rebound – LNG recap

European natural gas prices fell again on Monday and weighed on those in Asia as gas pipeline imports increased and the market became clearer on exactly when Russia’s Nord Stream 2 (NS2) pipeline could begin operations. operations.

Norwegian supplies surged higher on Monday as more capacity returned from the Troll field, where maintenance has limited volumes. Construction of the last stretch of the NS2 is expected to take at least September 12, according to a notice from the German Federal Marine and Hydrographic Agency. Russian President Vladimir Putin said on Friday that around nine miles of submarine pipeline remained to be completed.

European natural gas prices, which set records this summer amid low supply and storage stocks, fell 11% last week after Gazprom PJSC said the system would be capable of moving 5.6 billion cubic meters this year. The gas pipeline connecting Russia to Germany would help alleviate the continent’s gas shortage.

Falling European prices last week helped push down the Japan-Korea (JKM) marker in Asia, where demand also remained strong this summer as buyers had to compete with Europe for supply. JKM spot prices fell below $ 17 / MMBtu last week when the Dutch securities transfer mechanism fell on NS2 news.

The pipeline needs insurance and certification before it can start transporting natural gas. Domestic storage stocks are also low in Russia, which could limit the volumes available for Europe.

Analysts at Engie EnergyScan said on Monday that “European gas prices may be tempted to continue to rebound as the impact of the upcoming NS2 pipeline start wears off,” but noted that “any increase could be limited , especially since technical resistance could also be exerted on the downside. pressure. “

Meanwhile, spot prices in North Asia were valued Monday in the $ 15 / MMBtu range. Although they have slipped from recent highs as some price-sensitive buyers in the region have switched to other fuels, warmer weather is on the way over the next 6-10 days. Warmer-than-normal temperatures in Japan could increase demand for electricity.

The same is true in the United States, where the Henry Hub rose on Monday as forecasts called for above-normal temperatures through the end of August. Prices fell last week after a cooldown.

With European storage stocks around 20% below the five-year average and strong demand for replenishment before winter in Asia, US liquefied natural gas (LNG) export terminals are expected to increase volumes this winter to meet to increased demand.

The Calcasieu Pass export terminal and a sixth train at the Sabine Pass facility recently reported that they could be operational by the end of the year. Venture Global LNG inc. sent an implementation plan to the Federal Energy Regulatory Commission for the hot oil systems at the Col de Calcasieu. Chénière Energy Inc. has also recently obtained approval to operate its hot oil system.

Wood Mackenzie analysts said Monday they expected Train 6 to liquefy gas by December and be fully operational by 1Q2022. The 5 million metric ton / year train would increase capacity at Sabine Pass in Louisiana to 30 mmty.

Wood Mackenzie added that the first block of smaller modular trains at Col de Calcasieu are expected to liquefy by the end of November, with all 18 trains in line by the end of next year. The 10mmty plant is under construction in Louisiana.

In the shorter term, the Panama Canal, a preferred route for transporting goods between the Atlantic and Pacific basins, announced maintenance from August 29 to September 10 at its locks in Miraflores. The canal was already congested as Asia stepped up its calls for LNG and more cargo moved around the world amid a Covid-19 rebound.

The Panama Canal Authority recommended last week that shippers book transit early to avoid delays that could last “days or even weeks after completion.”

Somewhere else, Petróleo Brasileiro SA, alias Petrobras, authorized Excelerate Energy LP to lease the 20 million cubic meter Bahia regasification terminal in Brazil. Excelerate re-bid in July after rejecting an earlier proposal. Excelerate could take control of the terminal by the end of the year if it obtains final clearance. Brazil has struggled to import enough natural gas this year amid drought that has left its hydropower reservoirs weak and electricity demand high.

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