LONDON: UK natural-gas sellers are being forced to give the fuel away after a new pipeline from Norway increased supply at a time when storage sites are full, pushing prices below zero for the first time in nine years.
Dutch gas fell to its lowest since at least November 2003. Gas prices fell below zero as the oversupply forced sellers to pay to get rid of the fuel.
Gas for delivery yesterday at the National Balancing Point, the UK trading hub, sank to minus 5 pence a therm, according to broker ICAP in London.
The contract was trading at 3 pence a therm as of 12.46pm Wholesale gas prices are plunging in Britain, Europe’s second-largest economy, where households are paying their most expensive gas bills in a decade to heat their homes.
Gas sent through the Langeled pipe, the world’s largest sub-sea pipeline, will be able to cover about 20% of the UK’s daily demand.
The low prices are “a rare bonus’’ for UK manufacturers that are able to buy gas for prompt delivery, said Eddie Proffitt, chairman of the gas group of the Major Energy Users’ Council, a London-based lobby group for factories.
“It’s costing the Norwegians a bit to test their pipeline,’’ he said by phone yesterday.
About 41mn cu m of gas was supplied yesterday through the Langeled link from Norway to Britain, according to data from National Grid Plc, the UK network operator, at about 12.37 pm in London. That’s about 18% of expected demand in Britain, the European Union’s biggest market for the fuel.
Yesterday was the first day terminal flows are being published.
“The Langeled pipe offers more flexibility for us to send gas to the UK or mainland Europe,’’ Lars Nermoen, a spokesman for Norwegian gas supplier Norsk Hydro ASA, said by phone from Oslo yesterday. “We can’t say how much gas will come through Langeled to the UK.’’
The pipeline opened for commercial deliveries this weekend, sending prices for same-day delivery below zero for the first time since 1997, Heren’s European Spot Gas Markets newsletter reported yesterday.
Pipeline network supplies through 6am today are forecast to be little changed at 299mn cu m from 299mn last morning, National Grid said on its website at about 12pm London time. That may be more than the network can hold, forcing other suppliers to curb shipments.
Centrica Plc, Britain’s biggest energy supplier, and OAO Gazprom, supplier of a quarter of Europe’s gas, have agreed to buy gas shipped from Norway through the Langeled link. The pipe carries gas from Norwegian producers and will eventually carry gas from the Ormen Lange field operated by Norsk Hydro ASA.
Ormen Lange is due to open in about a year, taking shipments to as much as 70mn cu m a day.
“We have sold most of the capacity going into winter,’’ said Thor Otto Lohne, a senior vice president at Gassco, the Norwegian operator of the Langeled pipe, by phone yesterday. “It’s up to the suppliers if they want to use the capacity they have to send gas.’’ – Bloomberg |
