U.K. Natural Gas Prices Rise After Fault Curbs Norwegian Exports

Feb. 15 (Bloomberg) -- U.K. natural-gas contracts rose after pipeline deliveries fromNorway plunged and Gassco AS said a fault curbed exports from a processing plant last night.

"Kaarstoe is ramping up again after a reduction last night, due to technical reasons in combination with a power dip from the national grid," Lisbet Kallevik, a Bygnes, Norway- based spokeswoman for Gassco, said in an e-mail.

Deliveries from Norway through the Langeled pipelineinto northeast England dropped at about 2 a.m. this morning, National Grid Plc data show. Flows fell 77 percent to a rate of about 15 million cubic meters a day at 8:45 a.m. in London.

Gas for immediate delivery rose as much as 2.75 pence, or 5.3 percent, to 55 pence a therm as of 8:15 a.m. in London, according to broker prices on Bloomberg. That's equal to $8.82 a million British thermal units and 2.2 pence higher than the forward price for today at 4:30 p.m. yesterday.

Kaarstoe can process as much as 88 million cubic meters of gas a day and send it via sub-sea pipelines to markets in mainland Europe as well as the U.K.

Norway is the biggest foreign gas supplier to the U.K. and the second-biggest supplier to Europe after Russia. Norway sells spot gas to Britain rather than fuel under multiyear contracts, so drops in the country's production affect exports to the U.K.

Gas for next month gained 0.4 pence to 53.3 pence a therm. The summer contract rose 0.75 pence to 53.25 pence a therm.

No Kollsnes Fault

Kallevik said there's no fault at the Kollsnes export plant, Norway's largest. Last week a "technical problem" halted exports to the U.K. from Royal Dutch Shell Plc's Ormen Lange gas field, Europe's third-largest.

National Grid forecast gas demand at 330 million cubic meters in the 24 hours through 6 a.m. tomorrow, about 35 million less than normal for the time of year. The nation's pipelines will hold 284 million cubic meters of gas at that time, about 55 million less than at the start of today.

U.K. baseload power for next-working day delivery rose 80 pence, or 1.8 percent, to 46.30 pounds a megawatt-hour. Nearly half of the nation's electricity comes from natural gas-fed power stations so the fuel's cost influences power prices.

Power for next month gained 15 pence to 46 pounds a megawatt-hour, broker data on Bloomberg show. Baseload is delivered around the clock.

(Source: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/02/15/bloomberg1376-LGNHS40YHQ0X01-56HEKNPIBD6TR63FVKIKVGS9O4.DTL)