Norwegian production was broadly flat y/y in March 2019, totalling 10 bcm despite much lower demand because of mild weather and high European LNG receipts. A drop in flexible supply was likely offset by the ramp-up of Aasta Hansteen, although the sizable field is once again plagued by unplanned cuts in April, denting this month’s production. The big summer uncertainty for Norwegian production is whether producers will call on flexible Norwegian fields like Troll and Oseberg to help offset scheduled maintenance that is some 3.3 bcm higher y/y. With Europe’s gas balance looking well-supplied this summer and strong summer-on-summer contango, we think there is little incentive for Norway to offset maintenance outages with flexible pipeline supply. We expect summer 2019 output will ease y/y, taking total summer production to about 55.3 bcm, 3 bcm less y/y.
With the April Norwegian scheduled maintenance 0.19 bcm lighter y/y, producers could raise output this month. However, at the start of the month flows have tended to be flat or even lower y/y, particularly via Langeled, sparking some market talk that Equinor is not intending to use much of Troll’s flexibility this summer. Certainly with the supply-demand balance so much looser y/y, there is little incentive for producers to offset production lost from planned maintenance with higher Troll or Oseberg flows. Yet weather has been much colder y/y so far this month, likely adding a good 1.8 bcm y/y over the month to NW Europe’s gas demand. With TTF and NBP prices having jumped upwards in April trading so far, if there were ever a time to flex Troll this summer, it would be now. Norwegian pipeline receipts show no efforts to do so.
Given the lack of incentive and, seemingly, intention to use Troll flexibly, we have adjusted our forecast for Norwegian flows downward, taking total summer production down by 3 bcm y/y. We expect most of the y/y losses in Q3 19 corresponding with the heavier slate of planned maintenance. Some summer losses could be partially offset by higher Aasta Hansteen flows if problems at the field are finally fixed. February was the first month that saw a notable ramp-up in the Aasta Hansteen field as it jumped up by 8 mcm/d m/m. Equinor has previously said that it expected the field to reach full capacity (around 23 mcm/d) almost immediately after coming online in December. However, the field has been beset with unplanned maintenance since it started—as of 12 April, the field was expected be offline for two to 10 days—blunting the potential upside these fields could be providing.
|Fig 1: Production forecast, bcm y/y||Fig 2: Summer maintenance, mcm|
|Source: NPD, Energy Aspects||Source: Gassco, Energy Aspects|