Norwegian Gas Supplies Dominate European Market

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--More than two years after Russia upended natural gas markets by incurring harsh sanctions for invading Ukraine, Europeans are now relying heavily on supplies from Norway and the U.S., data show.

The Norwegian Offshore Regulator, which governs offshore oil and gas activity, reported the nation produced an average 12.7 billion cubic feet per day (Bcf/d) in natural gas last month, 4.1% higher than June levels and 12.3% above the government's expectations.

The offshore regulator provided no explanation for the increase, though state-backed energy company Equinor (NYSE:EQNR) (Stavanger, Norway) turned in positive results for operations over the three-month period ending in June.

On the Norwegian continental shelf, Equinor said higher output from the Troll and Oseberg fields helped lift its own natural gas production higher by 13%, relative to year-ago levels.

Total liquids production was 2.7% higher than during the second quarter of 2023.

Norway during the quarter was the main gas supplier to Europe, taking a 54% total market share and replacing Russia as the top exporter to the bloc. Sanctions imposed since 2022 have idled much of Russia's pipelines, while the Nord Stream network through the Baltic Sea remains out of service due to sabotage.

Norway was the largest pipeline gas exporter to Europe, with a 54% share. Russia accounted for 17% as some land-locked nations are exempt from sanctions. Norway's share in the European gas market was 4% higher than first quarter levels. The U.S. was the next-largest supplier, accounting for a 50% market share by way of liquified natural gas (LNG).

On the delivery side, quarterly data from the European Commission show the bloc received 59% of its natural gas from pipelines, with LNG imports taking up the remaining share.

The U.S. is the world leader in LNG exports by far, while the European Union (EU) is the largest importer, beating out both China and Japan. France was the largest importer of LNG in the bloc during the second quarter, with 22% of total imports.

Europe, meanwhile, does produce its own gas, but net production was down 26% relative to year-ago levels. The Netherlands was the largest producer in the bloc, representing 33% of total EU production.

Gas storage levels are suppressed, with volumes dropping 29% over the quarter to 68% full, a level the European Commission said reflected strong winter demand.

"On a year-on-year basis, the storage filling rate was 1 percentage point higher than in the same period of the previous year (67%), reflecting continued above-average storage filling rates compared to historic levels," the commission stated.

Wholesale gas prices remain suppressed, with European market prices down 33% from the first quarter and 49% lower year-on-year.

Broader markets are subdued as investors avoid making any big bets ahead of the release of consumer price data in the European economy.

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