Norwegian gas production totalled 121.7 bcm in 2018, down by 2.5 bcm (2%) y/y. Heavier summer maintenance and weak Q4 18 production dented total output. So far, 2019 is on track to follow a similar downtrend—weak gas demand in January has coincided with lower y/y flows, while revisions to the Gassco summer 2019 maintenance schedule suggest planned outages will be 2.8 bcm heavier y/y, compared to the 1.6 bcm y/y increase the schedule showed when first released in October 2018. We forecast Q1 19 production will be broadly flat y/y at 32 bcm, while total 2019 production will be 1.6 bcm lower y/y at 120.1 bcm.
Norwegian production had been on a steady rise since 2013, but 2018 marked its first significant decline. The drop was partly owing to a heavier maintenance schedule, with 1 bcm more y/y of production and processing capacity constraints in summer 2018. The rest of the decline can be attributed to a weak Q4 18, coinciding with lower European end-user demand on mild weather.
Weak demand continued into January, and Norwegian deliveries to the beach were down by 4% y/y in the first half of this month, against January 2018’s already low base. The bump up in production that we had expected to begin in Q4 18, coming from the start-up of the 23 mcm/d Aasta Hansteen field, has yet to materialise as the field’s delayed mid-December 2018 launch was soon after interrupted by unplanned maintenance, which has taken the field offline until 25 January. However, deliveries from Norway did ramp up several days ago with the arrival of one of this winter’s first notable cold snaps, suggesting that producers are now opting to use some of their upstream production flexibility. Given a very heavy production slate in February 2018 due to that month’s extremely high demand, there is only minimal incremental delivery capacity to raise flows y/y in February 2019. We expect production to remain flat y/y in February but receive a small y/y boost in March, provided Aasta Hansteen ramps up as scheduled.
With a reasonably heavy summer 2019 maintenance schedule, we forecast total 2019 production will fall by 1.6 bcm y/y to 120.1 bcm. Gassco reported that 7.6 bcm of capacity will be constrained in summer 2019, 2.8 bcm more y/y and 1.2 bcm more than was initially listed in October 2018. Some of that y/y decline should be offset by higher production in Q4 19, however, as the Johan Svedrup field is scheduled to start producing in November.
|Fig 1: Production forecast, bcm||Fig 2: Gassco maintenance production disruption, mcm|
|Source: NPD, Energy Aspects||Source: Gassco, Energy Aspects|