A y/y slowdown in Norwegian and Russian supply and a hefty y/y storage deficit at the start of September led European prompt prices to seek levels that would push gas out of the generation mix last month, preserving supply for injections. The result was lower total power sector gas demand in Northwest Europe, except in regions where heavy nuclear capacity cuts supported thermal generation. European stocks began October at 82 bcm, 2.9 bcm lower y/y.
Mild weather cut UK LDZ demand last month, but it was a hefty 0.31 bcm (22%) y/y drop in power sector gas demand that contributed most to the sharp fall in total consumption. Slow pipeline imports resulting from heavy Norwegian maintenance and low LNG sendout dragged total supply down by 0.37 bcm y/y to 3.6 bcm. The tight supply-demand balance boosted prompt prices to levels that pushed gas out of the generation mix, lowering gas-fired generation by 2.17 TWh (24%) y/y. The UK posted an unusually large September withdrawal of 0.26 bcm, leaving stocks at just 0.87 bcm by 1 October, well under 1.4 bcm capacity.
Tightness in continental NW Europe also led prompt prices to rise in an attempt to squeeze gas out of the generation mix, although the result varied across the region. Some countries such as Belgium and the Netherlands pushed more gas into power y/y owing to heavy nuclear capacity constraints there. Gas into power posted large y/y losses in Germany (-0.33 bcm, 48%) owing to gas-to-coal fuel switching and in France (-0.10 bcm, 33%) because of higher nuclear capacity and solar generation. Slower Russian supply into Central Europe encouraged strong German flows into the region, leaving net German imports lower y/y. A slowdown in IUK exports also tightened Belgian supply. Net supply into France and the Netherlands was higher y/y, however, owing to a small uptick in LNG sendout and higher pipeline imports. Continental NW Europe injected 5.0 bcm last month, 2.4 bcm more y/y, cutting the y/y storage deficit to 0.1 bcm. However, the small deficit is solely the result of a 1.8 bcm y/y increase in French stocks.
In Spain, gas-to-coal switching cut gas-fired generation by 1.1 TWh (33%) y/y, driving a 0.2 bcm (29%) y/y decline in power sector gas burn. An uptick in Algerian flows was unable to offset a drop in LNG sendout and French imports. Injections into storage were 0.14 bcm (+0.7 bcm y/y).
Hot weather and low wind generation (-0.4 TWh y/y) encouraged a hefty rise in Italian thermal output, boosting power sector gas demand by 0.4 bcm (19%) y/y. Pipeline imports expanded across the board, with flows through Passo Gries rising the most (+0.4 bcm y/y). LNG sendout fell by 0.3 bcm y/y amid slower LNG port receipts. The stockbuild was mostly flat y/y at 1.2 bcm, but generous injections earlier in the summer meant there was a 0.37 bcm y/y surplus at month-end.
|Fig 1: European consumption and end-user supply, bcm|
|Source: Country SOs, GIE, Energy Aspects|