European gas declines as LNG imports counter lower Norway supply

by Bloomberg Apr 22, 2022

Natural gas prices in Europe fell as ample liquefied natural gas imports offset lower deliveries from Norway amid planned works.

Benchmark futures were 3.4% lower, after rising as much as 5.2% earlier on Friday. Supplies from Norway are set to slump to the lowest levels in more than three months with seasonal work at the giant Troll field on Friday, according to nominations from operator Gassco AS. There are also unplanned outages at the Kollsnes processing plant.

The lower shipments are being partly balanced by increased LNG imports as higher prices in Europe compared with Asia pull cargoes.

“Europe should continue to benefit from high LNG supply, without having to overbid,” consultant EnergyScan said in a note. “But there is a reason for concern about the sharp drop in Norwegian supply. The missing volumes are probably being sought from power plants, which are asked to favor generation from coal.”

Gas is still heading higher this week following a period of relative calm in the market as the high levels of LNG imports and the end of winter heating demand countered supply risks arising from Russia’s rubles-for-gas order. There’s some pushback from European nations on the new payment terms, but disruptions aren’t seen as imminent with most bills due only later next month.

The U.K. has issued a temporary license allowing payments to Russian lender Gazprombank JSC, which the country has sanctioned, until the end of May for gas used in the European Union. It potentially signals flows will continue uninterrupted for the next few weeks at least.

Meanwhile, orders for Russian gas transiting Ukraine have inched higher in the past two days, but are still far below the levels seen before Easter. Supplier Gazprom PJSC reiterated that it’s sending gas in line with clients’ requests.

Front-month gas futures were trading lower at 96.69 euros per megawatt-hour at 2:33 p.m. in Amsterdam, but are 1% higher for the week. The equivalent contract in the U.K. slid 3.6%.