This group brings together those who are interested in topics around oil and gas exploration, drilling, refining, and processing.


European gas news: Weekly summary (13/02-17/02/2023)

Vitalie Ciobanu's picture
Market Intelligence Analyst, Borealis

Competitive & Market Intelligence | Analytics | Strategy | Financial Insights Energy | Gas: European gas market news | Green Economy | Green Hydrogen | Clean Ammonia *Working for Borealis but...

  • Member since 2023
  • 16 items added with 3,838 views
  • Feb 20, 2023

Below, there is a short review on what happened this week on European gas market. So, let's go:

  • Europe is on course to end the winter with a near-record volume of gas in storage because of industrial closures, high prices and a milder-than-normal weather. Exceptionally high prices have forced energy-intensive industries, including makers of fertilizer, steel, chemicals, ceramics, glass, and cement to close plants, which has saved large volumes of gas. On Friday, the European benchmark price of gas (Dutch TTF) fell below 50 EUR/MWh for the first time since late 2021. Prices spiked above 300 EUR/MWh in mid-2022, as Russia curtailed gas exports to Europe after its invasion of Ukraine. For now, high gas storage levels are providing a buffer for Europe, a sign of optimism that the region can make it through this winter and next.
  • European Union: Gas consumption in EU member states - excluding Cyprus - was 20.9% lower than a year earlier in January, according to Eurostat data. The drop was driven by reductions in the largest consumers, particularly Spain and Italy, where consumption fell by 29% and 22%, respectively. Generally, EU gas consumption fell by 19.2% in August-January against the five-year average, according to Eurostat, putting the bloc firmly on track to meet its 15% reduction target. The REPowerEU plan, which aims to end dependence on Russian fossil fuels, aims for a 15% reduction in gas consumption in August 2022-March 2023 compared with the five-year average for that period. Of the five biggest consumers - Germany, Italy, France, Spain, and the Netherlands — only Spain has so far missed the 15% threshold, albeit narrowly.
  • Shell: Europe’s increased need for liquefied natural gas (LNG) looks set to intensify competition with Asia for limited new supply available over the next two years and may dominate LNG trade over the longer term, according to Shell’s LNG Outlook 2023. European countries, including the UK, imported 121 million tons of LNG in 2022year, an increase of 60% compared to 2021, which enabled them to withstand a slump in Russian pipeline gas imports following its invasion of Ukraine. A 15 million ton fall in Chinese imports combined with reduced imports by South Asian buyers helped European countries to secure enough gas and avoid shortages. Europe’s rapidly rising appetite for LNG pushed prices to record highs and generated volatility in energy markets around the world. With reduced Russian pipeline gas, LNG is becoming an increasingly important pillar of European energy security, supported by the rapid development of new regasification terminals in north-west Europe. In contrast, China is evolving from being a rapidly growing import market to playing a more flexible role with an increased ability to balance the global LNG market.
  • Romania: Potential extractions from a long-awaited deep water gas field in the Black Sea could mean countries in the region can finally cut their dependency on Russian energy, Romania's foreign minister Bogdan Aurescu said on Friday. Romanian oil and gas group OMV Petrom said on February 2 it was "closer than ever" to embarking on its Neptun Deep gas project. The company, majority owned by Austria's OMV, has said it would make a final investment decision (fid) by mid-2023, with the first gas expected in 2027.
  • Italy: EU plans to reduce dependence on Russian fossil fuels could provide an opportunity for Italy to achieve its long-standing ambition to become a European energy hub, Italian prime minister Giorgia Meloni says. Italy has long aspired to become an aggregator of gas supply from Algeria, Libya, and Azerbaijan, as well as LNG that could offset dwindling output in Norway and the Netherlands. The country's gas grid operator, Snam S.p.A., has invested in reverse flow capacity at both its northern entry points – Passo Gries at the border with Switzerland and Tarvisio on the Austrian border — where 40 mcm/d and 18 mcm/d of export capacity are available, respectively, since late 2018. Supply available to the Italian market has also increased in recent years with the commissioning of the 10 bcm/y Trans Adriatic Pipeline (TAP) AG in 2020 and new allocation rules for regasification capacity boosting utilization of its LNG import terminals since 2018. The government has announced plans to add 12GW of renewable capacity this year, which may curb power-sector gas use. But further increasing supply from southern routes may take much longer. The TAP operator is considering raising the pipeline's capacity to 20 bcm/y, which could be completed by 2027year. State-controlled energy firm Eni has also signed a deal with Libya's state-owned NOC aimed at developing a major offshore gas project, which could boost supply to the domestic market, as well as exports to Italy, by 2026year. But Italy may be unable to absorb more supply from southern routes until Snam finishes its Adriatic pipeline project, which the firms expect to be completed in 2027. The project would increase south-to-north transport capacity by 10 bcm/y to 150 bcm/d.
  • Poland: PKN ORLEN S.A. has discovered an additional 500 million cubic metres (mcm) of natgas in the Jastrzebiec deposit near the city of Bilgoraj in Lublin, Poland's biggest refiner said on Tuesday. The discovery boosts the deposit's mineable resources to 700 mcm and may be larger, according to the company. "Domestic natural gas resources, in addition to supplies via the BalticPipe and the LNG Terminal in Swinoujscie, are an important element of Poland's energy security system," CEO Daniel Obajtek said in a statement. Further discoveries of gas from domestic deposits will allow the company to maintain its gas production in the coming years at a level close to 20% of the country's annual gas demand, Obajtek said. "Orlen will continue to invest in the exploration and production of hydrocarbons. The integration of companies operating in the upstream segment into a strong multi-energy group will allow intensifying activities in this area and create the potential to achieve even better results," he added.
  • China - Qatar: China National Petroleum Corporation (CNPC) is close to finalizing a deal to buy liquefied natural gas (LNG) from QatarEnergy over nearly 30 years from the Middle Eastern exporter's massive North Field expansion project. If sealed, this would be the second such deal between major LNG exporter Qatar and the world's no.2 LNG buyer, as Beijing looks to beef up gas supply and diversify its sources in a drive to replace coal and cut carbon emissions. CNPC's talks follow a deal announced last November by China's Sinopec International Petroleum Service Corporation, in which QatarEnergy agreed to supply 4 million tons of LNG annually for 27 years, the longest duration LNG supply contract ever signed by Qatar. As Beijing's ties with the United States and Australia, Qatar's two biggest LNG export rivals, are strained, Chinese national energy firms increasingly see Qatar as a safer target for resource investment. Sinopec and CNPC would not opt for such long-duration supply contracts unless they were also hoping to also acquire small stakes in the North Field expansion export facility, a second Beijing-based state gas official said. QatarEnergy has maintained a 75% stake overall in the North Field expansion, that will cost at least USD 30bn, and could give up to a 5% stake to some buyers, QatarEnergy Chief Executive Officer Saad M. Al-Kaabi has said. Chinese customs data revealed the country's imports of Qatari LNG surged 75% last year from 2021year to 15.7 million tons, making up a quarter of the nation's total imports, while China's total LNG imports shrank nearly 20%. In contrast, imports from Australia and the United States dropped 30% and 77% respectively from 2021, to 21.9 million tons and 2.09 million tons. QatarEnergy last year signed five deals with international majors for the North Field project, a two-phase expansion plan that will boost Qatar's liquefaction capacity to 126 million tons per year by 2027 from 77 million tons. Each of the five majors - TotalEnergies, ExxonMobil, ConocoPhillips, Eni and Shell - signed a joint-venture agreement with QatarEnergy that includes an equity investment in liquefaction export facilities.
  • Saudi Arabia: Aramco CEO Amin Nasser has warned that renewable energy won't be able to replace oil and gas any time soon and that investment in sustainable energy must not come at the cost of investment in hydrocarbons. The Aramco chief said environmental, social and governance (ESG) factors are "clearly a rising trend" in capital allocation decisions and a move in the "right direction." But he added that if ESG policies are "implemented with an automatic bias against any and all conventional energy projects, the resulting underinvestment will have serious implications for the global economy, for energy affordability, and for energy security." Saudi Arabia has set a target of net zero emissions by 2060.
  • Russia may become the largest supplier of natural gas to the Chinese market in the foreseeable future, Gazprom said in a statement on the holding's 30th anniversary. Russia supplied record-breaking 15.5 billion cubic meters (bcm) of natural gas to China via the Power of Siberia gas pipeline by the end of 2022. Meanwhile, in the coming years, the total volume of Gazprom's exports to China will reach 48 bcm of gas per year and including the proposed transit gas pipeline through Mongolia - around 100 bcm per year.
  • UAE: Abu Dhabi National Oil Company (ADNOC Group) will sell 4% of its gas business in an initial public offering (IPO). Sources also told Reuters last month ADNOC was eyeing a valuation of at least USD 50bn for its gas business, which would mean IPO proceeds of roughly USD 2bn or higher. ADNOC holds a 95% stake in ADNOC Gas after transferring 5% of the share capital to Abu Dhabi National Energy Company (TAQA Group). Following the IPO, ADNOC will hold 91% of ADNOC Gas. ADNOC is sharpening its focus on gas as Europe seeks to replace all Russian gas imports as early as mid-2024, after gradual supply cuts in the wake of Western sanctions imposed over what Moscow calls its "special operation" in Ukraine. Companies from the Middle East raised USD 21.9bn through IPOs in 2022, more than half the total for the wider EMEA region, which includes Europe and Africa, according to Dealogic.
  • European gas storage decreased further this week to 65% (-2.5 week-on-week), according to Agsi. In Germany, natgas injections through new fsru have limited withdrawals from gas storage, with levels of at 71.6% (-2.4 w.o.w.). In the Netherlands the status is much better at 64.1% (-1.5 w.o.w.), whereas in France, strategic gas reserves have dropped significantly to 49.8% (-6.5 w.o.w.) of capacity.
  • TTF Month-ahead (MA) has shown some volatility during the week, ending on Friday at 48.9 EUR/MWh (-5.3 EUR/MWh w.o.w.). PEG France (MA) stood at 45.5 EUR/MWh (-5.6 EUR/MWh w.o.w.), and the German Trading Hub Europe (THE) (MA) benchmark was traded on Friday at 49.8 EUR/MWh (-4.2 EUR/MWh w.o.w.).

If there is anything important and/or interesting on natural gas or energy markets occurred this week, please, leave it in the comments. Have a great weekend!

*Working for Borealis but reporting/sharing my personal opinions only


No discussions yet. Start a discussion below.

Vitalie Ciobanu's picture
Thank Vitalie for the Post!
Energy Central contributors share their experience and insights for the benefit of other Members (like you). Please show them your appreciation by leaving a comment, 'liking' this post, or following this Member.
More posts from this member

Get Published - Build a Following

The Energy Central Power Industry Network® is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.

If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.

                 Learn more about posting on Energy Central »