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High gas storage levels to have minimal impact on Norwegian gas prices

Published by , Editorial Assistant
Tanks and Terminals,

Unseasonably high gas storage levels in Europe should mean any delays to major maintenance projects planned for Norwegian gas assets in August and September will have less impact on prices than earlier in the summer according to Wood Mackenzie.

The report states that the decision by Norske Shell to extend repairs at the Nyhanma processing plant by 20 days caused TTF prices to increase by €10 per megawatt hours (MWh) within the week. This programme extension led to a further reduction in supply of almost 2 billion m3 from the Aasta Hansteen and Ormen Lange fields, which are connected to the Nyhamna processing plant. For a few days in June and July prices remained over €40/MWh.

Mauro Chavez, head of European gas markets at Wood Mackenzie, said: “There have been some serious concerns that more delays like the one announced by Norske Shell in June would have serious ramifications for gas prices as we head into the autumn. However, with European storage inventories reaching nearly 85% fill by late July amid muted gas demand in Europe and Asia, gas prices for this summer have fallen back to below €30/MWh.”

The report adds that the second phase of Norway’s maintenance schedule for its gas assets include work on the Kollsnes gas processing plant. The Kollsnes plant processes over 140 million m3/d of gas including the production from Troll, Norway's highest producing field.

Alireza Nahvi, Gas Research Analyst at Wood Mackenzie, commented: “Usually, any extended works on such a strategically important asset would be enough to cause a significant price reaction in the market. However, if European gas storage levels are near 90% by the end of the planned maintenance schedule at Kollsnes, the impact on prices would be minimal.”

With such an extensive maintenance programme planned, Wood Mackenzie anticipates 6% lower Norwegian gas production in 2023 versus the near-record performance in 2022, although output could be reduced further if the maintenance scheduled in August and September is extended by a significant margin.

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