July sees Norwegian gas back to normal

July gas production offshore Norway was 311.9mn m³/day, just 1.4% lower than the forecast last December and 2% up on the July 2020 volume, according to preliminary data from the Norwegian Petroleum Directorate published August 19. It was also 19% higher than it had been in June, and back to its March level. Crude and liquids production were also higher, as forecast.

June saw a big dip in both forecast and year-on-year gas production with problems reported offshore. This was in addition to a heavy maintenance programme, some of which had been delayed from the summer of 2020.

Production is set to rise substantially above last year's output from now until the end of the year, which will be some relief to European consumers. The continent is the market for substantially all Norwegian gas, now that the Hammerfest LNG plant and the related Snohvit field are out of action.

Europe has had to cope with a number of supply shocks, including from Russia where an August fire hit a condensate plant in western Siberia; and from the US, where nearly all the cargoes have gone to the higher-priced Asian market.  As a consequence, storage injections are lagging assumptions for this time of the year.

Forward hub prices for the duration of the year have been setting records, but Q1 2022 is a little lower, perhaps pricing in the start of at least some commercial flows through Nord Stream 2 by the end of December.