France urgently needs LNG imports to South port

By TARA PATEL
Bloomberg

France urgently needs to import liquefied natural gas to the southern port of Fos after prices in the region rose to a record, the energy regulator and gas distributor said.

As heating demand climbs amid cold weather, the difference in gas prices between the southern and northern French markets has widened to a record, the regulator Commission de Regulation de l’Energie said in a statement. The gap is a result of lower LNG supplies from Algeria and traders preferring to send shipments to Asia, where prices have risen, it said.

France’s energy regulator has warned of risks of tight supply in the south of the country, where prices were already pushed higher last year due to lower LNG imports and bottlenecks in getting piped gas from the north.

GRTgaz SA, the French gas pipeline operator controlled by GDF Suez SA, was to raise capacity on its north-south link in a bid to prevent price surges and volatility under a plan announced earlier this year.

“The gas market in southern France is facing major tension at the start of winter,” CRE said in its statement. High volatility and “low visibility” about how or when supply constraints will end are affecting the southern market, it said.

Supply shortages in the southern French market, known as Point d’Echange de Gaz Sud, or PEG Sud, pushed the difference in day-ahead gas prices with its northern counterpart PEG Nord to a record 12.29 euros ($16.80) a megawatt-hour on Dec. 3, the regulator said in its latest statement. The month-ahead differential was 6.24 euros a megawatt-hour, it said.

LNG imports

LNG imports to the Fos ports must be increased “quickly” to limit use of stored natural gas that may be needed later in the season, GRTgaz said on its website last month. More imports are also needed at Montoir in western France to prevent trade imbalances with eastern regions supplied by ports such as Dunkirk.

Gas storage in the PEG Sud hub was 76% full, down from 82% a week earlier, according to data from Gas Infrastructure Europe compiled by Bloomberg.

LNG prices have “risen significantly” in the past weeks in Asia to the detriment of imports coming to the European market, the regulator said in its latest statement.

LNG for delivery to northeast Asia was unchanged at $19/MMBtu this week after 12 weeks of gains, according to assessments by World Gas Intelligence of cargoes for delivery in four to eight weeks. That compares with $13.80 in southwest Europe.

Maintenance at the Algerian Port of Skikda has also lowered imports to Mediterranean ports in France and Spain, including Fos Cavaou and Fos Tonkin near Marseille, the CRE said. “It’s unknown” when the infrastructure will function normally.

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