Dutch quality gas conversion in June rose by 23% year on year amid weaker LNG supplies to the Gate LNG terminal and less gas extraction from the Groningen field due to stricter quotas.
Total Dutch H-cal to L-cal gas conversion in June came in at 1.952 Bcm, from 1.588 Bcm in June 2019. Output was down 7% from May, data from the Dutch gas grid operator Gasunie showed.
Daily conversion rates averaged 65 million cu m/d through June and have risen to 80 million cu m/d at the start of July amid fewer LNG supplies at Gate resulting from a series of US LNG tanker cancellations.
LNG supplies in June at the Dutch Gate LNG terminal totaled only 190 million cu m, from 750 million cu m in June 2019, data from S&P Global Platts Analytics showed.
Gas production at Groningen's remaining active fields (Zuidwest, Zuidoost, Loppersum, Centraal-Oost, Eemskanaal and Bierum) totaled 470 million cu m in June. Production at Groningen fell 63% year on year amid stricter production quotas at the field limiting extraction to 11.8 Bcm in Gas Year 2019 (October 1, 2019-September 30, 2020).
Recent advice from the Dutch regulator, the State Supervision of the Mines (SodM), to further restrict output at the field starting in October 2020 to 9.3 Bcm will pave the way for further production cuts.
Monthly conversion rates peaked at an all time-high in March, with demand at 2.631 Bcm in the month, up 40% year on year. Despite relatively mild temperatures and high storage stocks, supply flexibility was diminished in the Netherlands amid weaker indigenous supply pressured by the rapid phase-out of Groningen.
The weaker L-cal production from Groningen was met with higher H-cal quality conversion from H-cal gas pulled from Norway and Russia.
Pipeline imports in the Netherlands in June rose 4% year on year to 3.724 Bcm, with supplies from Norway gaining 9% to 1.828 Bcm, Platts Analytics data showed.
The Netherlands has been increasing the conversion of H-cal gas into L-cal gas, achieved by adding nitrogen at blending stations.
A large nitrogen plant -- Zuidbroek -- is expected to be fully operational in April 2022 and ensure a ramp-up in the conversion capacity to allow Groningen to close the same year.
