Pipeline Gas Trade Fell by Record on Lower Russia Flows, BP Says
Global trade of natural gas via pipelines fell the most on record last year as Russia halted exports to Ukraine and shipments declined from the Netherlands, the European Union’s biggest producer, according to BP Plc.
Exports of the fuel through pipelines fell by more than 6 percent last year, the biggest drop since the oil major started compiling the data in 1989, BP said in its annual Statistical Review. It’s only the second time global gas trade retreated. Russian shipments declined by 12 percent, while those from the Netherlands tumbled 30 percent, according to the data.
Russia halted supplies to Ukraine for six months last year due to a price dispute between the two nations. Gas production in the Netherlands fell the most of all the EU nations last year as the country’s government decided to limit output from the Groningen field, Europe’s biggest, after earthquakes caused by gas extraction damaged buildings in its most northern province.
“The weakness in pipeline gas trade was compounded by the dispute between Russia and Ukraine, which resulted in Russia’s gas exports to Ukraine being turned off between June and December last year,” said Spencer Dale, BP’s chief economist. “Lower exports to EU and Ukraine caused Russia’s gas production to fall by over 4 percent.”
Pipeline exports also dropped as consumption in the EU fell 11.6 percent last year, the biggest decline on record, BP said. Reduced demand in the 28-member nation bloc dragged down global consumption, which grew by 0.4 percent compared with a 10-year average of 2.4 percent.
While last year’s demand growth was the lowest in almost 20 years, with the exception of the financial crisis, global production gained 1.6 percent, causing prices to drop across the globe, BP said. Northeast Asian spot liquefied natural gas prices fell 45 percent in 2014, as U.S. gas on Henry Hub slipped 32 percent and U.K. fuel on the National Balancing Point fell 28 percent, the most since 2009, according to exchanges and World Gas Intelligence.
“This general weakening in gas prices also coincided with a further narrowing of the differential between regional gas prices, reflecting the increasing integration of global gas markets,” Dale said. “The main exception to this story of global gas weakness was, of course, the U.S., where gas production increased by over 6 percent.”