EU snapshot – Jul 2018

Published at 18:48 6 Aug 2018 by . Last edited 15:12 5 Nov 2018.

Unusually hot weather spurred power sector gas demand to multi-year highs in most parts of Northwest Europe last month, although lower res-com demand moderated some of the increase. In contrast, gas into power in Italy, Spain and France fell y/y on stronger hydro output. Northwest European supply tightened due to Nord Stream maintenance and lower LNG sendout, as wide JKM-TTF differentials pulled spot cargoes away from Europe. A tighter supply-demand balance left less gas for injections, widening the y/y storage gap to 3 bcm by 1 August, from 2 bcm a month earlier.  

  • Total UK consumption in July was flat y/y at 3.33 bcm, as falling res-com demand offset a big 0.23 bcm (16%) y/y rise in power sector gas demand. The increase in gas into power was driven by low wind generation caused by still weather, and lower available nuclear capacity due to summer maintenance. Supply was boosted by strong UKCS flows—helped by steady Rough cushion gas withdrawals—offsetting a steep drop in LNG supply. Still, a tight supply-demand balance led IUK flows to ease by 0.35 bcm (14%) y/y. UK stocks finished July at 0.87 bcm, broadly flat y/y.  
  • The supply-demand balance in NW Europe tightened last month as hot weather buoyed gas demand and Nord Stream maintenance cut supply. Gas into power in Belgium and Dutch industrial gas demand—which includes the power sector—hit a seven-year high for July.  The region offset lower Nord Stream volumes by increasing Russian receipts via the Czech Republic and cutting exports into Switzerland, while storage injection fell by 0.18 bcm y/y. Demand for supply via the Czech Republic led to a stark 0.65 bcm y/y drop in Baumgarten injections.
  • Milder weather in Spain reduced total power generation, while strong hydro (+1.8 TWh, +150% y/y) generation cut gas (-1.5 TWh, -40% y/y) and coal’s (-0.5 TWh, -13% y/y) share of the generation mix, shrinking gas into power by 0.3 bcm (36%) y/y. On the supply side, JKM prices at a premium to Spanish contracts led LNG receipts to fall by 0.6 bcm y/y to 0.8 bcm, slowing LNG sendout. Brisk North African pipeline flows continued, rising by 0.3 bcm y/y to 1.2 bcm.
  • Hot weather spurred total Italian power demand, but power sector gas burn shrank (-0.1 bcm y/y to 2.1 bcm) due to higher hydro output (+0.7 TWh, +17% y/y). Overall, total gas demand was 0.1 bcm (3%) lower y/y. As Northeast Asian markets continued to attract the bulk of spot cargoes, LNG receipts dropped by 0.3 bcm y/y to 0.8 bcm, cutting LNG sendout (-0.3 bcm, -32% y/y). North African imports also declined across the board. TENP imports fell by 0.3 bcm (28%) y/y because of Nord Stream maintenance tightening supply, but the decline was more than offset by a 0.6 bcm (27%) y/y increase in imports via Austria.  
Fig 1: European consumption and end-user supply, bcm
Source: Country SOs, GIE, Energy Aspects


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