(Montel) Norwegian oil and gas producer Equinor may begin adjusting gas supply to better match demand, as with hydro generators in the Nordic power market, said gas analyst Karen Sund at Oslo-based consultancy Sund Energy.
The UK is the Norwegian gas producer’s most important European market and gas delivery fluctuations can have an impact on the country’s NBP hub prices, as well as on those of continental Europe.
For example, spot prices rose almost 33% over the past week as an unplanned outage at the Aasta Hansteen gas field in Norway, which cut flows by more than 20mcm/day – potentially for up to two weeks – combined with lower temperatures and subdued LNG flows.
The NBP day-ahead price rose from a two-year low of 31.75p/th on 2 April to a monthly high of 42.20p/th on Tuesday.
Sund said Equinor did not publicly announce any curbs to gas deliveries made for commercial reasons, with any such reductions to the UK and continental Europe normally attributed to technical issues.
“It’s difficult to know if they reduce supply for commercial or technical reasons. Russia’s Gazprom is more open about [its commercial interests] when there is oversupply of gas in Europe,” she said.
Sund said few traders questioned the fact that dominant Norwegian hydropower producer Statkraft reduced generation when electricity prices fell – instead of maintaining high generation and letting prices tank further.
“This is 100% legal and the expected behaviour in the power market, but it is less normal in Norwegian gas than in Norwegian power,” she said.
Equinor had previously been openly focused on maintaining market share, Sund said.
This stemmed from “old habits” in the Norwegian gas sector, where suppliers attempt to recoup investment costs, while avoiding projecting the image of a dominant market player, with commercial interests influencing European gas prices.
But growing oversupply in Europe and stiffer competition from LNG, which has been flooding northwest Europe, could force through a paradigm shift within Equinor, she said.
“Norway can choose between the continent and UK for adjusting gas. All gas exporters have historically preferred flat production and full pipelines. Oversupplied markets give lower prices for everyone,” said Sund, adding that Equinor’s acquisition of Danske Commodities may turn Equinor more price-focused going forward.
“Before, there was a lack of gas. Now more players compete to deliver gas to the UK,” Sund said.
Equinor declined to comment on Sund’s claims.