Business World

Saturday 14 December 2019

Norwegian production problems stoke rise in gas price

An offshore gas platform operated by Statoil ASA stands in the Oseberg North Sea oil field 140kms from Bergen, Norway - gas and oil drilling is an important part of Norway's economy
An offshore gas platform operated by Statoil ASA stands in the Oseberg North Sea oil field 140kms from Bergen, Norway - gas and oil drilling is an important part of Norway's economy

Anna Shiryaevskaya

UK natural gas rose for an eighth day, the longest rising streak since March 2011, as production outages in Norway continued to curb supply and cold weather boosted demand. UK prices usually determine prices here in Ireland.

Front-month gas in the UK, Europe's biggest market, climbed as much as 3.1pc in London yesterday.

Norway, Britain's biggest foreign supplier, has flow constraints at three fields, with a reduction at the Aasgard field adding to continued limited flows from the Troll and Skarv fields.

Demand for the fuel is forecast to exceed seasonal norms. Prices also climbed as European Union carbon permits touched the highest level since March 3 in London trading.

"The ramp-up in heating offtake is likely to now bolster demand through the winter," said Marcel Boonaert, head of trading at Wingas UK.

"Curve contracts have also firmed, taking direction from the bullish prompt and continual gains in carbon prices."

Front-month gas rose as high as 61.25 pence a therm. Futures trading volume was about double the 100-day average for this time of day, according to data compiled by Bloomberg.

Constrained flows from Skarv are expected for "a couple of months," with production at half of capacity, according to BP, the field's operator.

Skarv produced three billion cubic meters of gas last year. The outage at Troll began on November 19 and is set to last to until December 11.

Temperatures in the UK dropped below the 10-year average yesterday.

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