Higher power sector gas demand helped partially offset lower residential and commercial (res-com) demand across the Netherlands, France and Belgium last month. Norwegian and UK supply remained strong, despite the halt to UK exports for part of the month.
Dutch industrial demand—which includes power sector gas demand—increased by 20 mcm y/y to 1.85 bcm, but res-com demand fell by 60 mcm y/y, Across the border in Belgium, power sector gas demand rose by 20 mcm (10%) y/y to 0.25 bcm. In France, a dip in res-com demand was partially offset by a 30 mcm (20%) y/y increase in demand from power as higher gas-fired power generation offset lower hydro and nuclear generation. Low nuclear generation in France, driven by repeated extensions to scheduled maintenance, once again helped increase gas-fired demand across the region.
On the supply side, Norwegian flows to all three countries were considerably stronger y/y. A lighter annual maintenance schedule, including works on the IUK (Interconnector), left the UK oversupplied for much of the month, crashing NBP prompt prices and encouraging Norwegian flows to divert to continental terminals. Higher imports into the Netherlands and stronger LNG sendout helped offset lower Dutch domestic production, and meet high-calorie gas (H-gas) demand at gas-quality conversion sites. High UK exports into Belgium also helped support strong flows onward to the Netherlands via Zelzate and Germany through Eynatten. While the IUK was shut for works over 14-28 June, flows on the pipeline were near capacity for much of the rest of the month.
But while LNG sendout was stronger in the Netherlands, it was lower y/y in France and Belgium. LNG sendout into the Belgian system was 20 mcm lower y/y in June at 80 mcm, while French regasification was lower at 50 mcm, down from 0.18 bcm a year earlier.
In all three countries, storage injections were lower y/y, meaning that the y/y storage gap widened over June. Dutch stocks finished at 6.8 bcm, down by 1.8 bcm y/y, while French stocks were 5.6 bcm, down by 0.78 bcm from a year ago.
For Q3 17, we are forecasting that gas demand from the trio of nations will be grow y/y by 1.2 bcm, supported by higher demand for gas for power generation. In Q4 17, we expect demand will fall by 0.3 bcm y/y but grow by 1.6 bcm y/y across 2018.