for week ending May 20, 2020 | Release date: May 21, 2020
In the News:
Poland seeks to diversify natural gas imports
Facing a continuing decline in domestic natural gas production and the expiration of Russian pipeline import contracts, Poland continues to diversify its imports by expanding connectivity to both the west and the south. On May 7, 2020, a major pipeline project—the Baltic Pipe—connecting the Polish natural gas grid with natural gas supply from Norway through Denmark, secured construction permits through Sweden’s territorial waters, the last such permit required before construction work can begin. The pipeline will have nearly 1 billion cubic feet per day (Bcf/d) of capacity and is planned to be commissioned in October 2022.
Domestic natural gas production in Poland has been declining over the past 10 years, falling to 0.4 Bcf/d (20% of the total natural gas supply) in 2019. Natural gas consumption, however, has grown by more than 30% over this period—from 1.4 Bcf/d in 2010 to 1.8 Bcf/d in 2019—as Poland’s main utilities expanded the domestic network and connected more industrial, residential, and commercial consumers to the natural gas grid. Since 2010, Polish utilities have added more than 13,000 miles of domestic distribution and trunk lines and maintained nearly 3% annual growth in domestic connections, according to Statistics Poland.
Rising domestic consumption and a decline in domestic production resulted in an increasing reliance on natural gas imports. Communist-era legacy pipeline connections were designed for closer integration with eastern supply, and as recently as 2010, natural gas imported from the east—primarily from Russia—accounted for 90% of imports and more than 63% of all supply. By 2019, however, volumes of natural gas imported from the east fell to 60% of all imports and 48% of the total consumption.
As a result of the recent expiration of the Yamal-pipeline transit agreement on May 17 and the forthcoming expiration of the long-term natural gas supply contract on December 31, 2022, between Gazprom (Russia’s state-run natural gas company) and Polskie Gornictwo Naftowe i Gazowe (PGNiG) (the main wholesale supplier of natural gas in Poland), diversification efforts in Poland continue at a rapid pace.
Pipeline imports from the west and south through newly established interconnectors with Germany, the Czech Republic, and Slovakia, increased from 97 million cubic feet per day (MMcf/d) in 2010 to 242 MMcf/d in 2019. In 2016, Poland also began importing liquefied natural gas (LNG) at the Polskie LNG terminal in Świnoujście, located on the Baltic Sea near the Polish-German border. LNG imports have grown from 94 MMcf/d in 2016 to 331 MMcf/d in 2019, contributing 18% to the total supply in 2019. Work to expand the 0.5 Bcf/d LNG terminal by 50% is slated for completion by late 2021.
Overview:
(For the week ending Wednesday, May 20, 2020)
- Natural gas spot prices rose at most locations this report week (Wednesday, May 13 to Wednesday, May 20). The Henry Hub spot price rose from $1.56 per million British thermal units (MMBtu) last Wednesday to $1.83/MMBtu yesterday.
- At the New York Mercantile Exchange (Nymex), the price of the June 2020 contract increased 16¢, from $1.616/MMBtu last Wednesday to $1.771/MMBtu yesterday. The price of the 12-month strip averaging June 2020 through May 2021 futures contracts climbed 4¢/MMBtu to $2.399/MMBtu.
- The net injections to working gas totaled 81 billion cubic feet (Bcf) for the week ending May 15. Working natural gas stocks totaled 2,503 Bcf, which is 45% more than the year-ago level and 19% more than the five-year (2015–19) average for this week.
- The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 52¢/MMBtu, averaging $4.27/MMBtu for the week ending May 20. The prices of natural gasoline and ethane rose by 8% and 18%, respectively. The prices of propane, butane, and isobutene each rose by 13%. Ethane prices continue to rise above their long-term trend of value relative to natural gas amid concerns about declining liquids-rich natural gas production in the Permian Basin and its impacts on availability of ethane as a petrochemical feedstock.
- According to Baker Hughes, for the week ending Tuesday, May 12, the natural gas rig count decreased by 1 to 79. The number of oil-directed rigs fell by 34 to 258. The total rig count decreased by 35, and it now stands at 339, the lowest on record dating back to 1987....
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....MUCH MORE.....U.S. LNG exports decrease week over week. Ten liquefied natural gas (LNG) vessels (four from Sabine Pass, three from Cameron, and one each from Freeport, Corpus Christi, and Cove Point) with a combined LNG-carrying capacity of 37 Bcf departed the United States between May 14, 2020, and May 20, 2020, according to shipping data provided by Marine Traffic. This export volume is the lowest since the week of October 17, 2019.....
