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UK summertime blues: coronavirus pushes gas market to deadlock

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01 May 2020

UK summertime blues: coronavirus pushes gas market to deadlock

Report summary

The UK gas balance has reached a deadlock for the summer. With weak demand persisting and UK production holding up, the market space has evaporated. Norwegian flows have already dropped to a floor but LNG imports into the UK's South Hook terminal have climbed as LNG exporters struggle to place cargoes. NBP has collapsed against continental benchmarks in order to incentivise flows out of the UK - but deeper discounts will be needed for even higher flows. The biggest losers exposed to the deteriorating UK summer outlook will be LNG exporters hoping to place cargoes into the UK market. There simply won’t be space. Consequently, the UK’s effective regasification capacity will be capped at 50% through the summer. LNG exporters desperately looking for market are fast approaching another brick wall.

Table of contents

  • Executive Summary
  • Introduction
  • The NBP discount to TTF deepens
  • UK gas demand is under pressure
  • Exports are reaching their limits
  • With space for storage injections very limited
  • UK domestic gas production is holding firm – so far
  • with Norwegian piped suppliers and LNG importers adapting
  • but the space for both Norway and LNG will shrink further
  • Has all of the UK market space already run out?
  • Conclusions

Tables and charts

This report includes 12 images and tables including:

  • NBP-TTF differential
  • UK gas demand
  • UK gas infrastructure
  • Pipe exports - Ireland (Moffat Interconnector)
  • Net pipe imports - IUK & BBL
  • Pipeline tariffs – IUK & BBL
  • UK storage inventory
  • UK gas production
  • UK gas production against short-run marginal cost (SRMC) of production and total annual opex
  • Daily pipe imports from Norway
  • Daily LNG send-out
  • Summer UK gas supply-demand balance

What's included

This report contains:

  • Document

    UK summertime blues: coronavirus pushes gas market to deadlock

    PDF 1.39 MB