London, 30 August (Argus) — The UK's second-quarter gas imports this year reached a record for the period — following a similar record in the first quarter — during an exceptional early spring cold snap and the continued decline of production from the UK's offshore.
Imports during April-June totalled 11.87bn m³, compared with 10.95bn m³ during the second quarter of 2012. Prior to this year, the previous record for second-quarter imports came during April-June 2011, when the UK imported 11.68bn m³, thanks to a massive influx of Qatari LNG not needed in a US that was already awash with shale gas.
Imports during the first half of 2013 as a whole also reached a record 28.34bn m³, compared with 25.92bn m³ during the equivalent period a year earlier.
The rise in imports came as indigenous production continued to weaken. Production slipped from 10.46bn m³ in the second quarter of 2012 to 10.34bn m³ this year, following a 14.6pc year-on-year decline — from 12.03bn m³ to 10.29bn m³ — in the first quarter.
The increase also came as heating demand across Europe soared as an already cold winter dragged on into early spring.
In the UK — where storage capacity is a fraction of that on the continent — stocks were already running low as the cold descended, further limiting the country's ability to cover elevated heating demand from domestic supply sources.
And tanker deliveries remained weak, falling by 8pc in the second quarter from a year earlier to 6.8mn m³ of LNG. While that was not as substantial a decline as in the first quarter — when just 2.5mn m³ of LNG was delivered, a 59pc slump year on year — the bulk of that supply arrived in May and June, after heating demand in the northern hemisphere had largely ebbed away.
Instead, the UK called heavily on Norwegian supply, and on deliveries through the two interconnectors linking Belgium and the Netherlands to the UK at Bacton.
Meanwhile on the continent, storage withdrawals remained exceptionally strong for the time of year, helping the region weather the diversion of Norwegian gas — from Germany in particular — to the UK.
The UK and Germany have broadly comparable demand, but UK storage capacity is five times smaller than that of Germany.
And the UK's import dependence could grow further next winter, as the continued decline of indigenous production pares deliverability, meaning that the UK may need to call more heavily on pipeline imports just to meet the heating demand peak.
In its winter outlook published in early July, system operator National Grid said it expected maximum supply from the UK's offshore to be about 110mn m³/d next winter, down from last winter's 125mn m³/d maximum delivery rate, even after production from new fields is taken into account.
Meanwhile the global LNG market is expected to remain relatively tight next winter, with relatively little new liquefaction capacity likely to have been added since last winter, and northeast Asian demand expected to remain strong at least through next winter — although much depends on Japan's nuclear restart timetable.
Send comments to feedback@argusmedia.com
jt/dt 4.0
If you would like to review other ArgusMedia.com content options, request more information about Argus' energy news, data and analysis services.
Copyright © 2013 Argus Media Ltd - www.ArgusMedia.com - All rights reserved.
