Nominated flows to Europe from Norway have held below 2024 so far this year, but this decline is roughly in line with the Norwegian Offshore Directorate's (NOD) revised forecast for gas output.
Nominated Norwegian flows to Europe, including the UK, averaged 327.5mn m³/d on 1 January-27 February, down by 4pc from 340.4mn m³/d a year earlier (see flows graph), data from Norwegian offshore system operator Gassco show.
But nominated deliveries from the Norwegian continental shelf (NCS) to Europe were particularly high in January last year at 348.2mn m³/d — the second-highest for any month since January 2017.
Norwegian flows to Europe held in a range of 295-318.2mn m³/d per year in 2021-23 and averaged 317.4mn m³/d across last year. But factoring out May and September last year, when maintenance on the shelf was the heaviest, average flows were 329.5mn m³/d.
Unplanned maintenance has cut into exports
On top of already scheduled works, unplanned maintenance has cut into production availability at several Norwegian fields so far this year.
Average capacity cuts at Norwegian fields were 11.9mn m³/d in January and 6mn m³/d on 1-27 February, the latest Gassco data show. This is up on the year from capacity reductions of 4.2mn m³/d and 5.6mn m³/d for the respective periods.
Gassco's schedule of works does not include capacity restrictions of less than 5mn m³. And past and scheduled Remit messages on the Gassco website include maintenance at 21 producing fields, but there are "currently above 65 producing units delivering into system", the operator has said.
Norwegian exports to Europe can also be limited by works at processing plants, although this impact is difficult to assess as production from some fields can be processed at more than one processing plant,is processed at the field or at a receiving terminal.
As such, available Norwegian export capacity can at times be lower than works at fields suggest.
Nominated flows to Europe peaked at 360.3mn m³ on 19 December 2023 in recent years, even though technical capacity of export infrastructure is higher. Taking this figure as maximum export capacity to Europe, there has been a gap between actual and potential flows in recent months (see actual versus potential flows graph).
NOD revised down forecast gas output for 2025
The NOD forecast that gas output on the NCS will fall faster on the year in 2025 than previously projected.
The NOD forecast NCS gas production to fall this year from 2024 by 5pc to 118.45bn m³ or 324.5mn m³/d this year, according to data published on 20 February. This is a downward revision from its previous projection of 120.4bn m³ or 329.7mn m³/d. This would correspond to a year-on-year decline of 3pc from 2024.
The forecast decline in output may have contributed to the drop in exports so far this year, although there is no confirmed production data yet available.
The NOD forecast does not factor in commercial flexibility, where firms producing on the shelf may defer some production volumes in reaction to market conditions.
In particular, production at the giant Troll field and fields in the Oseberg area, which account for a significant share of overall NCS production, are important flexible assets. Troll produced 119.5mn m³/d and Oseberg fields 24.2mn m³/d last year.
While the shape of the TTF forward-price curve has changed in recent days as TTF prompt prices have fallen more than contracts further out along the curve, there remains an incentive to maximise production now looking longer term (see price graph), suggesting limited scope for production deferrals.
In addition, forecasts by the NOD are likely based on the schedule of works at the time of modelling, but further gas works are often added over time and unplanned outages can occur, as has been the case so far this year.
Maintenance at Norwegian fields is scheduled to be significantly lighter in March-December than in the period last year. Capacity cuts at the fields were scheduled as of today to be 14mn m³/d over the next 10 months, peaking at 48.6mn m³/d in September. This is down from realised capacity cuts of 29.7mn m³/d in March-December last year and a peak of 111.9mn m³/d in September 2024.
In any event, the 4pc on-the-year decline so far this year is not far from the forecast decrease of 5pc.
LNG could fill in for lower Norwegian exports
LNG deliveries might need to step up this year to fill in for lower Norwegian exports to Europe.
Given the expected reduction of NCS gas output of 5.79bn m³ this year from 2024, assuming an average LNG vessel size at 174,000m³ and accounting for boil-off and heel — LNG which remains in the vessel when unloading — Europe would need an additional 61 LNG cargoes this year to substitute the drop in Norwegian pipeline deliveries.
And given the halt in Ukrainian transit of Russian gas at the start of the year, combined with continental storage stocks at a multi-year low approaching the end of the winter, it is likely Europe will need to attract even more LNG cargoes to comply with EU-mandated storage filling targets for 1 November.
