Wholesale energy prices up as demand for LNG grows

Gas prices corrected higher at the NBP on Thursday amid a need to keep spot LNG cargoes competitive.

Small, incremental gains of circa 1p/therm (0.03p/kWh) were posted across the near-curve as slight delays to Norwegian maintenance and surging Egyptian LNG demand came into focus.

According to data from offshore operator Gassco, the current wave of seasonal maintenance across the NCS (Norwegian Continental Shelf) is now set to peak from 7th September at 237.17mcm, remaining at that level for 3 days before gradually softening across the rest of September.

Offline capacity had initially been slated to reach its highest level from 2nd September, mainly attributed to rescheduling of planned maintenance at the Nyhamna and Kollsnes gas processing facilities. It should be said however, that restrictions via the Langeled pipeline for Norway-UK flows remain unchanged and normal export availability is still expected to return from 16th September.

On the LNG front, despite the 3 vessels that are currently signalling to arrive at British terminals by 4th October, reports of elevated demand for the fuel in Egypt are potentially playing into supply uncertainty later in the year – ahead of winter.

Although Egypt has historically been considered an energy independent country, the state-owned EGPC has reportedly signalled its intention to purchase up to 20 vessels from October, in a move that has the potential to strain availability for imports into the UK and EU later this year.

In other news, Russian President Vladimir Putin remarked on Thursday that state-owned operator Gazprom would be willing to divert EU-bound gas flows to other entry points after the Ukrainian transit agreement ends in December, thus retaining Russian export volumes. It’s unclear if the EU wishes to take Putin up on this offer however, as the bloc has been working toward diversifying away from Russian energy imports since the invasion of Ukraine back in February 2022.

This morning, gas prices have opened at a slight premium when compared to yesterdays close, with the Winter 24 front-season contract currently being offered circa 2p/therm (0.07p/kWh) above its previous settlement, at time of writing.

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Price commentary courtesy of Crown Gas and Power