From the U.S. Energy Information Administration:
Natural Gas Weekly Update
In the News:
Russian and Norwegian natural gas pipeline exports to Europe increase over the summer amid lower prices
Natural gas pipeline exports to Europe from Russia and Norway, two of its largest suppliers, have steadily increased over the summer as European countries accelerated the refill of storage inventories. European countries have injected a record 1,834 Bcf from April 1 through September 22, amid the lowest natural gas prices since 2009. Combined Russian and Norwegian exports to Europe increased by 8% in the second quarter of 2015 over first quarter levels. This was driven by a 58% increase in exports from Russia over this period, with Russian natural gas pipeline prices at German border averaging $7.35 per Million British Thermal Units (MMBtu), compared to $9.36/MMBtu, on average, in the first three months of this year. Prices declined further to $6.66/MMBtu in August, as oil-linked contractual natural gas prices began to reflect declines in crude oil prices.
The sharp decline in crude oil prices between August 2014 and January 2015 had a significant effect on European natural gas markets, where most natural gas trade is based on long-term contracts linked to crude oil or petroleum product prices, lagged three to nine months. As the North Sea Brent crude oil price declined to $47.76 per barrel in January 2015, a more than 50% decline from August 2014, European buyers began to optimize their oil-indexed contracts by decreasing imports in the winter while drawing heavily on gas in storage in anticipation of lower natural gas prices in the spring and summer 2015.
Going into the winter of 2014-15, Russian exports to Europe were at record low levels, 22% below the five-year (2010-14) average. The exports declined even further to 6.4 billion cubic feet per day (Bcf/d) in January and 5.3 Bcf/d in February, a 36% and 40% decline from the five-year (2010-14) average for these months, according to EIA calculations of data published by the International Energy Agency (IEA).
Since March, Russian exports increased and remained at high levels into the summer. As of July, the most recent monthly data available, Russian exports averaged 11.9 Bcf/d. While Russian exports transiting Ukraine on the Brotherhood pipeline have been decreasing, exports on Nord Stream pipeline into Germany hit record high levels this year, increasing by 55% and 59% in June and July, respectively, compared with the same months last year. The German border price for Russian gas declined by more than 30% in April-August 2015 compared with last year.
Natural gas pipeline exports from Norway increased by 4% in the second quarter of 2015, compared with the same period last year, and averaged 9% higher year-on-year in January-July 2015, according to IEA data. Additional imports from Norway are offsetting declines in imports from the Netherlands. A further government limit on the Netherlands Groningen field production implies a maximum 2015 production of 30 billion cubic meters (Bcm) (1,059 Bcf), a 12.5 Bcm (441 Bcf) reduction from the previous cap announced in 2014.
Storage inventories in Europe have been filling up at a rapid pace over the summer and currently stand at 2,578 Bcf, according to data by Gas Infrastructure Europe. The injections between April 1 and September 22 of 1,834 Bcf have been the highest of the 2010-15 period, surpassing the previous 2013 record of 1,625 Bcf in this period. High export volumes from Russia and Norway are expected to continue in the remaining few weeks of the injection season, supported by lower natural gas prices, both spot and contract, which are expected to be sustained at current levels in the next few months....MORE