Norway's gas flows take a dive
Europe’s congested gas market sees Norwegian sales drop to an almost three-year low
Norway sold less than 265mn m³/d of gas in August, according to the latest figures from the Norwegian Petroleum Directorate (NPD), the lowest monthly figure since September 2016.
Gas sales for the October-September Gas Year (GY) will be materially lower than in the previous two GYs, and could finish back closer to the levels of GY14-15 and GY15-16.
The European gas market continues to feel the effects of a mild last winter both in Europe, which left domestic storage stocks high, and in Asia, which ended up oversupplied with LNG cargoes. Combined with continuing ramp-up from new LNG liquefaction plants globally, Europe has struggle to absorb gas supply by switching from coal to gas-fired power, leaving its storage facilities perilously close to tank-top.
In this situation, it is perhaps unsurprising that Norwegian gas flows to Europe have had to step down. August’s dip in sales (see fig. 1) put them at the lowest since Norway sold just over 210mn m³/d in September 2019.
FIG 1: Norwegian gas production (mn m³/d) Source: NPD
Cumulative sales for the first 11 months of GY18-19 stood at 110.4bn, compared to 114bn m³ or above at the same stage in GY16-17 and GY17-18 (see fig. 2). Given that it would take September flows in excess of 420mn m³/d— almost 50mn m³/d above the monthly record —to catch up the deficit and come in at the 123bn m³ sold in both previous GYs, Norway’s total gas volumes this GY will clearly be lower.
FIG 2: Cumulative Norwegian Oct-Aug Gas Year production (bn m³) Source: NPD
GY14-15 and GY15-16 gas sales were 116bn m³ and 117bn m³, 6bn m³ and 7bn m³ less than the two following years. GY18-19 will likely come in slightly higher—September flows would only need to be 220mn m³/d to match the 117bn m³. But they would need to be 320mn m³/d, higher than any month since April, to reach the 120nbn m³ midpoint between the GY15-16 and GY17-18 totals.
On oil sales, Norwegian liquids volumes dipped slightly month-on-month from 1.71mn bl/d in July to 1.65mn bl/d in August (see fig. 3). Year-on-year, sales fell by 0.22mn bl/d, the ninth consecutive month of annual sales decline.
FIG 3: Norway liquids production (mn bl/d) Source: NPD
FIG 4: Year-on-year change in Norwegian liquids production (mn bl/d) Source: NPD