TTF Premium Over North Sea LPG Widens to at Least Two-Year High
The premium held by the Intercontinental Exchange (ICE) front-month Dutch Natural Gas Title Transfer Facility (TTF) over North Sea propane and butane prices has widened to its highest level since at least May 2024, buoyed by North Sea maintenance and geopolitical tensions.
The TTF marker opened up a $9.295/MMBtu premium over North Sea liquefied petroleum gas (LPG) on Aug. 13.
In the first 13-days of the month, TTF has held a $8.39/MMBtu premium over North Sea LPG – enticing producers to seek better value for LPG by re-injection into the natural gas stream.
Comparatively, the premium held by TTF over LPG averaged $4.89/MMBtu and $7.57/MMBtu in the first and second half of July.
Given the current deficit to natural gas prices, expectations for North Sea LPG exports are not promising, an analyst at a U.S. refiner noted.
In the first 14 days of August, a total of 149,000 metric tons of propane and butane has been shipped from Norway, with another 30,000 mt scheduled for the remainder of the month, data from shipping analytics provider Vortexa showed. Comparatively, Norway shipped 308,000 mt in July and 198,000 mt in August last year.
One of the drivers for these recent gains on the TTF future contract has been the extension to maintenance works at the Ormen Lange field offshore Norway.
The facility is expected to operate at 61% until Feb. 1, having been pencilled in previously to return on Oct. 1, data from Norwegian gas operator Gassco showed.
The work reduces production from the Ormen Lange field by around 9 mcm/d, which equals around 3% of Norwegian pipeline gas export, energy analysts at Nordic brokerage DNB Carnegie noted.
Gas from Ormen Lange is processed at the Nyhamna facility and exported to the UK and Europe via the Langeled pipeline.
The extension removes another 1.1 bcm of natural gas from the European supply picture, the equivalent of 11 liquefied natural gas (LNG) cargoes. And with storage in European already lagging at 59%, the margin for error this winter has narrowed once more, one analyst noted.
Simultaneously, the 79.8 million cubic meter/day Nyhamna onshore natural gas processing unit itself is currently operating below capacity and is expected to up until Sep. 24.
The unit began ‘corrective maintenance’ on June 8, taking operating capacity down to around 75%. The unit was expected to return to full capacity in July, but the restart was pushed back 82 days, Gassco data added.
Geopolitical tensions continue to play their part in creating such volatility in the natural gas market.
Uncertainties continue over the reopening of the Strait of Hormuz and developments in negotiations between the U.S. and Iran continue to shape demand/supply balances.
And with LNG flows out of the Middle East Gulf severely disrupted, and Asian demand rising, Europe finds itself in direct competition for cargoes.
Europe faces an uphill battle to replenish stocks ahead of the fourth quarter and meet regulatory goals. Member states are expected to hit a 90% filling target, but the new rules allow for a broader deadline of Oct. 1 to Dec. 1, rather than the previous hard Nov. 1 deadline.
There is also leeway on storage amounts, allowing inventories to be refilled only to 75% full. A 10% flexibility allowance was granted in case of difficulties when rebuilding storage, as well as a 5% allowance in the event of persistent unfavorable market conditions.
August is seasonally the month with the lowest demand in Europe, but in September we will start to see gas demand grow again, DNB Carnegie noted. As of now, the price premium is still pointing to Asia as the preferred destination for U.S. LNG, but the premium is deteriorating, so we might see an uptick in European LNG imports soon, they added.
Gas stocks in the EU reached 60% on Aug. 13, according to data from Gas Infrastructure Europe (GIE). Comparatively, stocks are at their lowest level for this time of year since at least 2011, and are 13 percentage points below 2025 levels, the data showed.
Reporting by Jamie Aldridge, jaldridge@opisnet.com; Editing by Jaime Llinares Taboada, jllinares@opisnet.com