U.K. Grows as a Gas Exporter, Thanks to a Weaker Poundby
Exports to Belgium Friday reached highest in three years
Demand for gas in U.K. limited as injections into Rough halted
The U.K. is exporting the most natural gas to Belgium since June 2013 after an outage at its biggest storage site reduced demand and a weaker pound made the fuel more attractive to buyers in mainland Europe.
Britain is sending spare fuel through a two-way pipeline to Zeebrugge on Belgium’s coast in part because domestic demand fell amid a shutdown of the nation’s biggest gas storage, Centrica Plc’s Rough. Flows via the 235-kilometer (146-mile) link, which started in 1998, are at the highest level for the time of year since 2004, data on Bloomberg show.
“It is U.K. injections that would otherwise be going to Rough, now being incentivized to go and get injected into European storage,” Trevor Sikorski, head of natural gas, coal and carbon at Energy Aspects Ltd. in London, said by e-mail. “Expect higher U.K. imports of gas then to occur in the winter.”
U.K. summer gas demand typically comes from the need to store fuel for heating during the winter. This year, injections slowed after Centrica shut Rough, which can meet 10 percent of peak daily demand and accounts for 70 percent of the nation’s storage capacity, for tests until at least November.
Exports via the Interconnector pipeline to Belgium reached the highest level since June 2013 on Friday, data from operator Interconnector (U.K.) Ltd. show.
Exports were also boosted by regional price spreads. The pound plunged to the lowest level since 1985 in the aftermath of the country’s decision in the June 23 vote to leave the EU, widening a difference with gas prices on the continent.
Day-ahead gas on the National Balancing Point in the U.K. fell to a discount to fuel on the Zeebrugge hub in Belgium after the vote after trading at a premium during the previous seven months, according to broker data compiled by Bloomberg.
“Zeebrugge, along with liquefied natural gas and swing output from the North Sea are all options available to the U.K. gas suppliers while access to Rough gas storage facility remains restricted,” Elchin Mammadov, an analyst at Bloomberg Intelligence, said by e-mail. “However, the increased flows from the U.K. to Belgium have more to do with the price spread rather that the outage at Rough.”