The UK National Balancing Point price closely mirrors gas prices in other parts of Europe and also oil prices, but because the UK buys less gas indexed to oil prices relative to other European countries, the NBP can be lower than other European prices, said Bennett and Bentek analyst Chris Micsak in their joint presentation.
All UK LNG is imported at prices indexed to the NBP, Bennett told Platts on the sidelines of the conference.
So far this year, sendout from UK terminals was up 0.8 Bcf/d, Micsak said, although demand is down 1.7 Bcf/d on the year, primarily because the recent winter was mild while the previous winter was cold.
The significant increase in UK imports this year, primarily from Qatar, has helped reduce UK NBP prices but has not delinked them from oil-indexed prices, Micsak said.
About 55%-60% of the gas in Northwest Europe is bought under oil-indexed contracts, Bennett said, which has a ripple effect on UK prices.
So far this year, European gas demand is down 3.75 Bcf/d from last year, Bennett said.
The reduced demand has led to relatively high storage levels in European markets and bearish sentiment. Micsak said, adding that UK storage is 70% full, German storage 75%, Belgian 62%, Dutch 75%, and French 52%.
The Japanese nuclear crisis in the wake of the March 11 earthquake and tsunami will balance the LNG market a year earlier than previously expected, with global demand expected to be 40.5 Bcf/d in 2016, compared with projected supply of 39.5 Bcf/d, Bennett said.
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