Algerian troubles curb winter LNG deliveries to France: GRTgaz

by Reuters
Tuesday, 17 January 2017 20:21 GMT

(Adds prices, quotes, details)

PARIS, Jan 17 (Reuters) - French gas grid operator GRTgaz said a force majeure in Algeria and tensions in the global gas market were reducing deliveries of liquefied natural gas (LNG) to southern France, just as winter demand for heating intensifies.

Deliveries to the Fos-sur-Mer terminal were at about 40 gigawatt-hour (GWh) per day, compared with the 70 GWh per day needed to meet increased winter demand for power and heating, GRTgaz chief executive Thierry Trouve told journalists on Tuesday.

The low deliveries at Fos and congestion on the pipeline linking France's northern and southern gas hubs has led to the widening of the spread between prices in the two regions as prices in the south hit new highs.

The day-ahead contract in the southern hub fell 10.81 percent to 33 euros ($35) per megawatt-hour (MWh) on Tuesday, while the price in the north fell over 19 percent to 13.35 euros/MWh.

Trouve said the current prices in the south are competitive with prices in Asia, and attractive to operators who would like to deliver cargoes to southern France and southern Spain where supply was tight as well.

The force majeure is in place after Algeria's Skikda LNG facility, which is used for deliveries to French and European markets, went into a scheduled maintenance operation, but it should restart very soon, according to a source at Algeria's state energy company Sonatrach.

Sonatrach has delivered four LNG cargoes to its French client in January. The cargoes left Arzew facility in the west of Algeria for Fos-sur-Mer terminal, the source told Reuters on Tuesday.

"The quantities delivered have decreased, but the minimum has been delivered and Sonatrach has respected its contract commitments with the French client," the Sonatrach source said.

Trouve said several LNG deliveries had been announced from Algeria in the past weeks and the vessels programmed to deliver, but they had not materialised because deliveries were lured by higher prices elsewhere.

"Some operators are looking for alternative solutions," he said, adding that there was heavy demand for gas for power generation in southern France due to the cold weather, at about 85 GWh per day.

He said critical supplies were needed in early February.

Tensions in the world gas market, with expected U.S. gas production going to Asia instead of Europe, were exacerbating the problem.

"We are doing everything to have more LNG deliveries by end February," Trouve said.

($1 = 0.9341 euros) (Reporting by Bate Felix in Paris and Lamine Chikhi in Algiers; Editing by Sudip Kar-Gupta/Ruth Pitchford)

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