Page 15 - EurOil Week 34

EurOil PERFORMANCE EurOil

Norwegian oil output rebounds in July

NORWAY NORWAY’S oil production returned to growth August 24.
in July, while the recovery in its gas output con- The NPD expects liquids output to fall
Norway’s government tinued, data published by the Norwegian Petro- slightly to just above 2mn bpd in August, but
imposed output cuts leum Directorate (NPD) on August 24 shows. then see modest but steady growth during the
at the start of June, Extraction of crude oil and other hydrocar- rest of the year.
but these were eased bon liquids averaged 2.062mn barrels per day Norwegian gas extraction meanwhile
in July. (bpd) last month, up 11% month on month and climbed for a second month in a row in July.
up 20.2% year on year. It also beat the NPD’s Output averaged 305.6mn cubic metres per day,
forecast by 1%. marking a 9.3% growth m/m. However, this was
Crude oil-only production came to 1.725mn still 1.1% lower than the level in July last year and
bpd in July, up 12.7% m/m and up 27.7% y/y, sur- was 1.5% under the NPD’s forecast.
passing the forecasted level by 0.8%. Norwegian producers have held back some
Norwegian oil output has been rising for supply this year because of the steep decline
much of the last year on the back of the early in gas prices, triggered by the coronavirus
launch of Equinor’s Johan Sverdrup megapro- (COVID-19) pandemic. The global gas market
ject in October. The field is now flowing around was already oversupplied before the crisis began,
470,000 bpd. primarily because of new LNG capacity coming
In solidarity with OPEC+ efforts, though, on stream.
Norway’s government imposed output cuts at Prices have rebounded this month, however,
the start of June. Liquids production slumped as summer heat has led to increased use of air
8.8% that month from the level of June, landing conditioning, causing consumption to spike. The
at 1.86mn bpd. October contract at the Netherlands’ TTF hub
Producers were allowed to restore 116,000 closed at €7.62 ($9) per MWh on August 21, up
bpd of production in July, but will not be able from a low last month of €5.45.
to extract any more until the end of the year. The NPD projects that gas production will
Even in December, production will be 300,000 slide under 300 mcm per day in August, but will
bpd lower than what companies would other- then see steady growth during the rest of the year,
wise have anticipated, the government said on arriving at around 340 mcm in December. ™

European gas storage reach 90% capacity

EUROPE EUROPE’S gas storage facilities were almost even as many of Europe’s pipeline gas suppliers
90% full on August 18, data published by Gas have seen weaker sales.
COVID-19 is just Infrastructure Europe (GIE) shows, marking an According to GIE, some 995.6 TWh of
one factor behind the unusual high for the time of year. gas is currently in storage in Europe, out of a
build-up in gas storage Europe has seen an unprecedented build-up total capacity of 1,107 TWh. At the same point
volumes this year. in gas storage volumes over the past year, owing last year there was only 977.4 TWh of gas in
to several factors. The continent’s LNG imports storage.
soared in 2019, as higher production capacity in Gas storage levels in Ukraine also con-
the US and elsewhere drove down prices. This tinue to rise steadily, reaching 253.8 TWh on
encouraged increased coal-to-gas switching August 18, GIE data shows, up from 221.2
but also gave traders an incentive to store more TWh a month earlier and 198.4 TWh on June
volumes. 18. Ukraine’s nameplate gas storage capacity is
Towards the end of last year companies 320.3 TWh, but it has not stored this much in
also expanded their stocks in anticipation of a decades.
potential disruption to Russian gas supplies via The country has adopted new measures in
Ukraine. This disruption was averted as Moscow recent years to encourage European traders
and Kyiv were able to agree an 11th-hour deal to use its underground reservoirs, includ-
covering continued transit in 2020. ing reduced tariffs and a customs warehouse
Gas demand has also been weaker this year, scheme. This scheme allows foreign firms to
not only because of coronavirus (COVID-19) keep their gas in Ukraine for up to 1,095 days
lockdown measures, but also unusually mild without paying customs duties and other taxes.
weather in the winter months. Hot weather in These measures have had some success,
recent weeks and a resulting increase in air con- with storage operator Ukrtransgaz reporting
ditions has shored consumption levels, however. on August 5 that foreign companies accounted
This spurred a rebound in prices earlier this for nearly a quarter of the gas in its facilities, or
month. 5.2bn cubic metres. This was almost four times
LNG imports have continued rising in 2020, the volume at the same point last year. ™

Week 34 27•August•2020 www. NEWSBASE .com P15