* Major export pipeline closed
* LNG imports to add to glut
* High solar power output cuts demand
By Susanna Twidale
LONDON, June 15 Prompt wholesale British gas
prices have plummeted 40 percent since the start of the week and
could fall further, as a heat wave cut demand and the closure of
a major export pipeline left the market with nowhere to send
Britain's within-day wholesale gas price, one
of the most liquid prompt prices in the country's gas market,
traded at 22.70 pence/therm at 1352 GMT, a 40 percent fall from
last Friday’s close.
"The combination of warmer weather, plentiful supply and no
route to export has left people holding gas they don't want and
created a race to the bottom," said Nick Campbell, risk manager
at Inspired Energy.
Traders said the drop was caused by a series of factors,
most notably the closure of the Interconnector UK (IUK) gas
pipeline between Britain and Belgium for maintenance this week
cutting off a key market for Britain's excess gas.
Demand has also plummeted as a heat wave has gripped the
Home heating usually accounts for around 40 percent of
Britain's gas demand, while expected imports of liquefied
natural gas (LNG) from Algeria and Qatar over the next few weeks
have exacerbated the situation.
"Given the IUK shutdown, there is no real space to put this
extra LNG," said Thomson Reuters gas analyst Oliver Sanderson.
Sanderson said that given the weak demand and plentiful
supply, prices could keep falling but that he would not expect
to see them trade consistently below 20 pence/therm.
Energy Aspects analyst Trevor Sikorski said the high
temperatures also led to bumper output from Britain's solar
power generators, cutting the demand for gas from gas-fired
power stations to produce electricity.
Data from Britain's National Grid showed solar power
was supplying around 20 percent of Britain's electricity on
Thursday, while wind contributed a further 14 percent.
Traders said the market had been caught unawares by the LNG
shipments. "The new catalyst was the LNG scheduled to arrive ...
but it's everything," said a gas trader who did not want to be
named as he is unauthorised to speak with the press.
Traditionally, excess gas is stored in the summer for use in
the winter when demand is high.
However, Britain's largest gas storage site, Centrica owned
Rough, is unable to take injections of gas until next April due
to concerns about the integrity of storage wells at the site.
(Editing by Mark Heinrich)