We are pleased to present Aurora’s latest northwest European gas market review.
Highlights of our January 2021 report include:
- Gas prices: Average gas prices in northwest Europe rose by 30% month-on-month in January, to €20.6 /MWh due to a supply crunch amid increased demand from heating and power. High Asian LNG spot prices led to LNG cargoes being diverted to Asia, which resulted in the supply tightness in the European gas markets. The NBP spot traded 12% (or €2.4 /MWh) higher than the prices in Continental Europe due to lower-than-usual indigenous production putting further upward pressure on prices.
- Consumption: Total gas consumption in NW Europe was broadly flat with January 2020 at 32 bcm. Decreased gas demand in Germany (-2.8 bcm) is offset by increased gas demand outside Germany.
- Supply: Storage withdrawals increased by 5.0 bcm year-on-year, contributing almost a third of the European supply mix at the expense of LNG, which decreased by 3.7 bcm across the same time period. Pipeline imports from Norway and Russia rose by 1.8 bcm, accounting for a combined 50% share of the total supply, helping offset declines in indigenous production (-1.0 bcm) and LNG imports (-3.7 bcm).
- Indigenous production: Dutch production was down 13% year-on-year but was up 15% month-on month in response to increased gas demand. Despite higher demand than in December, GB production fell by 7% month-on-month due to unplanned production constraints in the UK Continental Shelf (e.g., Barrow North and Bacton).
- Pipeline imports: Total pipeline imports rose by 10% versus the prior year, primarily due to 1.5 bcm higher flow from Russia. Driven by increased demand and high prices, Russia increased gas exports to Europe via all the major routes.
- LNG: Total LNG send-out from NW European LNG regasification terminals was 72% lower year on-year due to the tight LNG supply. This led to the terminal utilisation rate across the country was lower than the 12-month average.
- Storage: Storage withdrawals were up 67% year-on-year as the main contributor to meeting marginal demand in NW Europe. Storage inventory levels fell to the trailing 5-year minimum. However, there remain vast differences between countries. Inventories in GB and Belgium remained below 10 days of demand, whilst French, German and Dutch storage had at least 30 days of demand.
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