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UK GAS: Short system, low LNG support continues to add pressure

https://www.chemnet.com   Aug 10,2010
UK gas prices started the week in bullish mood Monday as the system remained uncomfortably short, with an insufficient amount on LNG available to support the low availability, traders said.


The day-ahead contract was changing hands at around 43.60 pence/therm by 12:00 London time, 1.10 p/th above Friday's close, while within-day was up 0.70 p/th at 44.10 p/th.


On the curve, gas for Winter 10 delivery had gained 0.50 p/th to 50 p/th.


"The gas system is very short again this morning and has moved from 16 million cubic meters to 19 million cu m," one trader said.


"Two LNG tankers berthed at Dragon and Isle of Grain over the weekend but the flows are very low this morning. Dragon is sending out 0 flows which looks like it is supporting day-ahead," she added.


National Grid showed supplies for the day at 204 million cu m/d, while demand was pegged at 217 million cu m/d. Seasonal normal demand is currently 226 million cu m/d.


The shortage of gas was partly due to continued restriction flows from Total's Alwyn gas field which returned from an unscheduled outage Saturday.


Total also confirmed work at the Elgin-Franklin field--unavailable since July 30--was ongoing, restricting flows to Bacton SEAL, which was flowing gas at a rate of 6 million cu m/d.


With Dragon LNG unavailable Monday morning, Isle of Grain and South Hook
availability was a little more consistent at a total 30 million cu m/d.


National Grid said in an e-mail that the Arctic Lady berthed Sunday at the Isle of Grain LNG terminal in Kent, while port data showed the Qatari LNG
tanker Aamira was berthed just off Milford Haven in Wales.


The delivery is expected to South Hook on Tuesday, and the Qatari Al Safliya is expected to deliver to the same location on Saturday.


The UK is also lining up several further LNG cargo deliveries in the coming days including the Murwab, the first Qatari LNG delivery to the Dragon LNG terminal on August 16.


Sources added there was further pressure feeding into the UK market from Continental Europe as maintenance on the European Transit gas pipeline meant
interconnector exports have been low.


"There was news on Friday that the restart was delayed to Wednesday,however interconnector exports have gone up to 32 million cubic meters again today," one trader said.


Work to protect the Swiss Transitgas pipeline from rockfalls has been completed, but the operator has not yet said when the pipe will resume flowing
gas to Italy.


The UK-Belgium Interconnector was running at an increased rate Monday of 33 million cu m/day, compared with 18 million cu m/day on Friday, the latest forecast around 1230 London time indicated.


On the weather front, CustomWeather indicated temperatures in London are likely to remain 1-2 degrees Celsius below the seasonal norm Tuesday in a range of 12-21 C, cooling as the week progresses.
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