PARIS: French gas grid operator GRTgaz said on Friday that low liquefied natural gas (LNG) deliveries to the Fos-sur-Mer terminal in the south of the country had led to a tight supply situation and heavy withdrawals from saline storages to meet winter demand.
The situation, which began in November, has led to a spike in the gas price in France's southern hub, which touched its highest level since December 2013 at 40 euros ($42.57) per megawatt-hour this week, widening the spread with prices in the north to 21.35 euros.
When asked why deliveries were low a GRTgaz spokesman declined to comment. A trader said the main reason for fewer deliveries to the Fos terminal was higher Asian prices pulling supplies out of Europe, and also high Turkish demand which was draining off European supply.
"The Turks have ramped up imports to deal with high demand due to freezing weather," the trader said. GRTgaz said the latest weather forecast for France, which shows a prolonged cold spell next week with temperatures near record lows below seasonal levels, could worsen the situation.
It said the saline storages (salt caverns) are at their lowest level for this period of the year compared with the last five winters.
"With no LNG arrivals at Fos-sur-Mer in the short term, withdrawal from saline storages remain nevertheless the only solution to meet the immediate needs," GRTgaz said.
GRTgaz urged market players to respect the recommended minimum daily gas withdrawal limit so as to have enough supply until the end of winter.
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