Montel Magazine 1 - 2020 - Page 13

Market talk 1.4 GW Norway-Scotland cable viable – NVE A mooted 1.4 GW electricity interconnector between Norway and Scotland would be profitable, said Norwegian energy regulator NVE. However, it would be up to the country’s government to decide whether to award a licence to the North Connect project, it added, referring to an expected decision from the government this year. NVE’s analysis showed the cable would increase local power prices but that it still would have a “socioeconomic benefit” of around NOK 8.5bn (EUR 0.8bn) over a period of 40 years. RF Fresh Olkiluoto delay “bullish” from Q2 Nordic power prices could rise from Q2 onwards due to another delay to the start-up of Finland’s 1.6 GW Olkiluoto 3 nuclear reactor, analysts said. Operator TVO said in December that the reactor would not be ready to start commercial operation before March 2021, six months later than previously announced and 12 years behind the initial start-up date. The fresh delay to the European pressurised reactor would remove 1.5-2 TWh of supply that participants had anticipated to come to market during the unit’s test phase initially scheduled from June to October, said chief analyst Sigbjorn Seland at StormGeo. “This is clearly bullish for the Q2 and Q3 contracts and also for the 2020 contract.” GOM Analysts raise Nordic price expectations Market analysts polled by Montel have raised their overall price forecasts for 2025 Nordic spot power by EUR 0.40 on average to EUR 40.20/MWh compared to a year ago, though estimates vary by as much as EUR 20. The prospects for a faster coal phase-out in Germany and the Netherlands, more ambitious EU climate policies, fast consumption growth and new interconnectors between the Nordic region and continental Europe would offset the bearish effect of surplus renewables capacity, said the analysts. Price estimates varied from EUR 51/MWh (Jamtkraft) to EUR 31/MWh (Modity). AT Ukraine, Russia sign full gas transit deal Ukraine’s Naftogaz and Russia’s Gazprom signed a five-year gas transit agreement in early January. “New gas transit contract to Europe – inked!,” said Ukrainian prime minister Oleksiy Honcharuk. The deal is made up of several contracts that encompass a large package deal which has “restored the balance between the interests of the parties”, said Gazprom CEO Alexei Miller. “This is a great day for Europe’s energy security, as all the pieces have fallen into place. I welcome the signature of the transit contract between respective companies in Russia and Ukraine, building on our political agreement from last week,” said Maros Sefcovic, the vice-president of the European Commission. SRS WoodMac sees gas price plunge continuing Last year’s plunge in European gas prices will likely continue into 2020, according to consultancy Wood Mackenzie. It expected prices on the Dutch TTF hub to average EUR 11.65/MWh this year after spot gas tumbled roughly 40% to EUR 13.50/MWh in 2019. Expanding global LNG supplies would struggle to find a market amid record full European gas stocks and stalling Asian demand growth. WoodMac tipped LNG supply to rise by 7%, or 26m tonnes per annum, this year, largely due to US projects. Asia’s JKM price was likely to average USD 4.60/MMbtu (EUR 14.10/MWh) and could trough at USD 3.60/MMbtu in summer. NW Nord Stream 2 faces delay to Q1 2021 – Putin Work on the Nord Stream 2 gas pipeline to Germany looks set to be completed by early 2021, Russia’s president Vladimir Putin said. “I hope that by the end of this year, or in the first quarter of next year, work will be finished, and the gas pipeline will start operating,” Putin told media after talks with German chancellor Angela Merkel in Moscow. Putin’s comments come in the wake of a statement by Russian energy minister Alexander Novak who vowed to finish the pipeline later this year. Work on the pipeline has ground to a halt due to the threat of US sanctions on companies involved in the project. MC US LNG exports to grow 55% by 2021 – EIA US LNG exports will grow 55% over the coming two years, despite an expected slowdown in gas production, the country’s Energy Information Administration (EIA) said. LNG exports would rise to 6.5bn cubic feet per day (bcfd) this year, from 4.98bcfd in 2019, with the EIA anticipating a further increase in 2021 to 7.7bcfd. “[The] EIA assumes US LNG export capacity will reach 8.9bcfd by the end of [2020] as Cameron, Freeport and Elba Island place their remaining trains in service,” it said, regarding three east coast export terminals. LW Tighter LNG market in sight – Cheniere The global LNG market is poised to tighten, according to US exporter Cheniere, even as Europe struggles to absorb volumes amid some of the lowest winter spot gas prices in at least a decade. “We are getting to that point where we are at the top of the supply cycle and we are going to start seeing the market rebalance fundamentally,” said Andrew Walker, Cheniere vice president for strategy, at an industry event. “We’ve got a significant ramp-up in supply coming on in the first half of this year and then we kind of reach the peak.” Last year saw a possible record volume of gas supply enter the market at just short of 40m tonnes, around the same as the previous peak of 2010, Walker said. NW Gazprom launches 31.5bcm TurkStream Russia’s Gazprom has started up its 31.5bcm TurkStream gas pipeline, which links Russia with Turkey and southern Europe via the Black Sea. The 930km gas pipeline has two strings, with the first delivering gas to Turkey, while the second is intended for gas transit to southern and south-eastern Europe, through Turkish territory. “Gas supplies via TurkStream will help strengthen energy security in Turkey and Europe,” the Russian supplier said. LW Montel Magazine 1–2020 13