March 4, 2013 / 9:46 AM / 6 years ago

UK gas hits five-year high as unplanned outages squeeze supply

* Within-day gas reaches 108 pence/therm

* Ormen Lange gas plant problem cuts Norway supply

* St. Fergus flows reduced after unplanned production loss

* Power spot market at one-year high

LONDON, March 4 (Reuters) - British gas prices rose more than 50 percent on Monday after unplanned outages at North Sea facilities left the UK gas market severely undersupplied, pushing prices to a five-year high.

Within-day gas prices traded as high as 108 pence per therm on Monday morning as the system was undersupplied by around 60 million cubic metres per day (mcm/d).

Prices were volatile in morning trading, moving between 96-108 pence.

Norway’s Nyhamna gas plant connected to Shell’s giant Ormen Lange field in the North Sea, which primarily exports gas to Britain, had an outage on Saturday after stormy weather, with production still down by around 53 mcm/d on Monday. The capacity of the plant is 70 mcm/d.

“It’s the Nyhamna outage, Ormen Lange’s processing plant. With storage so low and Norway running 100 percent it’s gone mental,” said one British gas broker.

In addition to the Norwegian outage, flows through Britain’s St. Fergus terminal were reduced by around 7 mcm/d on Monday, creating an extremely tight supply situation.

The St. Fergus terminal receives gas from the FRIGG pipeline, which transports gas from the Cormorant Alpha field, among others, that experienced an outage due to a hydrocarbon leak over the weekend.

At the same time, UK gas traders have been worried about very low gas storage levels, drained over weeks of below-average winter temperatures.

Inventories at Britain’s largest storage site, Rough, were more than 60 percent below the lowest point reached last winter, National Grid data showed.

“With storage levels extremely low and supply from Norway falling from 70 mcm to 50 mcm, the system has become even more strained in the face of rising demand and more long positions as we struggle to meet demand with Rough outflows,” said Serge Mozadila, energy market analyst at LG Energy group.

The bullish prompt pushed up prices across the market, with front-month April adding 0.85 pence to 68.40 pence a therm and the benchmark front-season contract trading up to 66.65 pence, up 1.25 pence on Friday’s closing level.

Power prices rose in line with the bullish gas market, trading up 10.75 pounds on the spot at 62.25 pounds per megawatt-hour (MWh), the highest in over a year. (Reporting by Karolin Schaps; editing by Anthony Barker and Keiron Henderson)

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