[Premium] Rough, LNG Lift IUK Flows to Belgium in Record Month (Update)

(Adds data on flows in para 2)

Large deliveries of LNG to South Hook and the Isle of Grain, the closure of Rough to new injections of storage gas, and higher Norwegian production have pushed the UK price below continental Europe this summer, and in turn led to high export flows to Belgium through the Interconnector UK (IUK). 

The higher Belgian price triggered record UK-to-Belgium daily and monthly volumes through IUK in July, CEO Sean Waring told NGW August 1.

"July 2017 has broken all flow records for IUK. We have had our highest ever volume delivered in a calendar month (18,851 GWh) as well as the highest individual daily forward flow of 648 GWh. This equates to a utilisation of around 97% over the month," he told NGW later in an email.

He said that the market had not yet factored in the new economics that would apply from October 1 2018 when the existing ship or pay contracts that underpinned the pipeline's construction expire. Long-term capacity beyond that date remains unsold, and traders will have to decide nearer the time whether to pay to keep the line open. "The sunk costs will end and the economics will then change," he said.

Waring is hoping that the continuing value of the line has been demonstrated by the amount of gas flowing through it in the year to date. At present the incentive for booking capacity is just the short-term difference between the Belgian and UK hub prices, less the cost of the fuel gas to run the compressors to take the gas to the higher market, but long-term capacity has been offered but not taken up.

William Powell