Europe’s biggest gas supplier, Norway, is starting the annual maintenance on gas fields, processing plants, and pipelines, which will see Norwegian gas flows slashed through the middle of September.
Some planned works have already begun this week, including the processing plant at Nyhamna. Others begin this weekend, with most maintenance expected to be completed by September 18. The giant Troll gas field in the North Sea—Europe’s biggest gas-producing field, and the Kollsnes onshore processing plant, will start maintenance on Saturday and Sunday.
All these maintenance works are expected to reduce Norway’s gas supply by a third during the first half of September, according to estimates by Reuters.
Yet, the maintenance works are already priced in in Europe’s benchmark natural gas price,s and analysts do not expect price spikes unless the maintenance extends beyond the scheduled timeframe.
Dutch TTF Natural Gas Futures, the benchmark for Europe’s gas trading, have been falling in recent weeks as Europe is building up gas inventories for the winter.
So far this summer, Europe’s task has been made easier by lackluster spot LNG demand in Asia. European buyers have not been competing with Asian importers for LNG supply and have not been paying too high premiums for cargoes.
As China is expected to see in August its tenth straight month of falling LNG imports from a year earlier, the weakness in Chinese LNG demand has been welcome news for Europe as the EU scrambles to fill up inventories going into the winter.
The EU gas storage levels are now close to 77% full, below the seasonal five-year average of 84%, but prices have been under downward pressure amid ample LNG supply.
The TTF price settled 3% lower on Thursday, despite Norwegian gas flows to Europe falling to their lowest level since mid-July amid ongoing maintenance work in Norway, ING strategists Warren Patterson and Ewa Manthey said in a note on Friday.
By Charles Kennedy for Oilprice.com
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