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Gas production in EU-27 likely to decline modestly

Oil&Gas Materials 21 March 2022 14:24 (UTC +04:00)
Gas production in EU-27 likely to decline modestly
Laman Zeynalova
Laman Zeynalova
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BAKU, Azerbaijan, March 21. It is notable that the Communication from the European Commission does not make any mention of increasing natural gas production in the EU-27, to offset the reduction in imports from Russia, Trend reports with reference to the Oxford Institute of Energy Studies (OIES).

“This is an implicit recognition of the ongoing decline in EU gas production. Dutch gas production in 2021 was 18.75 bcm, comprising 6.8 bcm from Groningen and 12.0 bcm from the ‘small fields’. The government is currently reluctant to use its powers to increase production at Groningen, or to extend its life, but in more severe market circumstances it might be persuaded to do so. Without such intervention, total Dutch production is unlikely to exceed 16 bcm in 2022, and could actually be lower,” OIES said in its latest report.

Given that production at Groningen between September 2021 and January 2022 was 1.4 bcm, this suggests that production between February and September 2022 will be 3.2 bcm, giving a total for January-September 2022 of 3.66 bcm. Given that production at the small fields is likely to stabilise (at best) or decline further (at worst) from the 2021 level, total Dutch production for 2022 (assuming no Groningen production beyond September 2022) is actually likely to be less than 16 bcm, a year-on-year decline of around 3 bcm.

In the rest of the EU outside the Netherlands, the ongoing gradual decline in gas production continues, with production falling from 39.2 bcm in 2017 to 27.6 bcm in 2020, and a further decline to 25.7 bcm in 2021. A substantial proportion of this decline is accounted for by Germany, Italy, Ireland, alongside smaller declines elsewhere, which are all unlikely to be reversed in the foreseeable future.

In Denmark, the Tyra gas processing and export centre (which processes 90 per cent of Danish gas production) was shut down in September 2019 for extended maintenance and is now not expected to restart until June 2023. Moreover, Danish gas production is forecast to rebound only to 2.7 bcm per year by 2025. 92 If another 2 bcm year-on-year decline occurs in 2022, the total decline in EU-27 gas production could be 5 bcm.

Outside the EU-27, there is no technical or commercial flex in UK gas production, but there is expected to be a modest recovery in 2022. Gross production fell sharply from 39.3 bcm in 2020 to 32.5 bcm in 2021 due to temporary shutdowns related to project-related offshore investment, and is expected to recover to about 35-36 bcm in 2022. From an EU perspective, this additional UK production could help to increase the re-export from the UK to the EU of both pipeline imports from Norway and LNG from elsewhere.

Overall, gas production in the EU-27 is likely to decline modestly even if production at Groningen is preserved at its present level, and production is not halted in mid-2022 as planned. Otherwise, the decline may be steeper. In the event that the planned cessation of production at Groningen takes place, even the rebound in UK production will not be sufficient to prevent a modest overall decline in European (EU + UK) production.

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