U.K. gas traders had an unusual situation on their hands last week. The opening of the Langeled pipeline between Norway and the United Kingdom flooded the market with supplies and pushed prices below zero. That is, sellers were paying buyers up to 5 pence/therm for the privilege of “selling” their gas.
Wholesale spot gas prices plunged on a gas glut in Britain, Europe’s second-largest economy. However, later in the week flows through the Langeled pipe declined by a little more than 10%. U.K. prices were swinging between gains and losses on rising temperatures and full storage, 100% full in the case of Rough, the U.K.’s biggest gas storage facility.
Gas traveling though Langeled, the world’s largest sub-sea pipeline, will provide about 20% of the United Kingdom’s daily demand, Blomberg reported. Last week was the first time in nine years that U.K. gas prices fell below zero, Bloomberg said.
The Langeled pipeline will eventually carry gas from the Ormen Lange field, which is operated by Norway’s Norsk Hydro ASA. Ormen Lange is supposed to come on line in about a year. When it does, gas shipments are expected to increase to about 70 million cubic meters a day.
Otto Lohne, senior vice president at Gassco, the Norwegian operator of the pipeline, told Bloomberg the firm has sold most of the pipeline’s capacity going into winter. “It’s up to the suppliers if they want to use the capacity they have to send gas,” he said.
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