Weekly Energy Report Tuesday, 26 May 2015

Sources: :LEBA/ICE

22/05/2015 15/05/2015 Change (% )

Day Ahead 40.75 41.40 -1.6%

Jun-15 40.55 41.30 -1.8%

Jul-15 40.73 41.37 -1.6%

Aug-15 40.52 41.18 -1.6%

Q3-15 40.71 41.34 -1.5%

Q4-15 44.69 45.33 -1.4%

Win-15 45.72 46.39 -1.5%

Sum-16 42.38 43.03 -1.5%

Win-16 46.95 47.43 -1.0%

Sum-17 43.00 43.44 -1.0%

Power Base Week on Week (£/MWh)

Power Peak Week on Week (£/MWh) Sources: LEBA/ICE

22/05/2015 15/05/2015 Change (% )

Day Ahead 44.50 46.35 -4.2%

Jun-15 44.73 45.40 -1.5%

Jul-15 44.66 45.42 -1.7%

Aug-15 44.81 45.18 -0.8%

Q3-15 44.73 45.29 -1.3%

Q4-15 51.88 52.74 -1.7%

Win-15 52.87 53.75 -1.7%

Sum-16 46.22 46.82 -1.3%

Win-16 54.03 54.62 -1.1%

Sum-17 47.20 47.64 -0.9%

Source: TGP/ICE

22/05/2015 15/05/2015 Change (% )

Day Ahead 42.05 44.55 -5.6%

Weekend 41.45 43.93 -5.6%

Jun-15 41.44 42.57 -2.7%

Jul-15 41.36 42.32 -2.3%

Aug-15 41.70 42.70 -2.3%

Q3-15 41.72 42.73 -2.4%

Q4-15 46.75 47.75 -2.1%

Win-15 48.20 49.20 -2.0%

Sum-16 43.60 44.58 -2.2%

Win-16 50.06 50.97 -1.8%

Sum-17 44.46 45.30 -1.9%

Gas Week on Week Settlement (p/th)

-4.5% -4.0% -3.5% -3.0% -2.5% -2.0% -1.5% -1.0% -0.5% 0.0%

0

10

20

30

40

50

60

70

£/MWh

Power Peak Week on Week Settlement Source: LEBA & ICE

22/05/2015 15/05/2015 Change (%)

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

010203040506070

£/MWh

Power Base Week on Week Settlement Source: LEBA & ICE

22/05/2015 15/05/2015 Change (%)

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

0

10

20

30

40

50

60

70

p/th

Gas Week on Week Settlement Source: TGP/ICE

22/05/2015 15/05/2015 Change (%)

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UK Gas Weekly Summary

Gas Summary:

Prompt contracts were dominated by the bears last week, with the majority of contracts slipping into negative territory session on session. Meanwhile, the Day-ahead contract managed to muster some strength on Monday in anticipation of planned maintenance at the Easington entry point on Tuesday. The outage lasted 24-hours and ceased import flows via the Langeled pipeline, however a boost in Norwegian deliveries via Vesterled pipeline significantly offset the impact. This in part offered bearish pressure to prices, although imports were limited via the Langeled pipeline as it returned to service on Wednesday, following annual maintenance at the Ormen Lange field, which had production curtailed until the 28th May. However, LNG send-out from the South Hook terminal rose to a two year high during the week and remained high as the facility prepared for a glut of impending arrivals before the beginning of May. This subsequently held the system in oversupply for the remainder of the week, continually suppressing products below their previous closing points. A similar sentiment was casted over the near curve, as confirmation arrived that the Al Samriya and the Al Kharsaah will dock at South Hook, amid two already destined for British ports. Wednesday saw the bulls make a brief appearance, lifting contracts a touch on the back of revised weather forecasts for June as temperatures are anticipated to outturn below seasonal normal. However, this was short lived and the downward trend resumed by Thursday, in response to a strengthening pound relative to euro following mounting concerns over Greece’s’ ability to repay its debts. Further along the curve, contracts sought direction from bearish crude oil until Wednesday, following a strong US dollar. Mid-week movement stagnated as further dated contracts battled with the impact of a strong pound against a bullish Brent crude market. Eventually currency broke the balance allowing prices to be suppressed further into negative territory through to the end of the week.

Week on Week Gas Supply and Demand (mcm/day) Source : Reute rs

Network 22/05/2015 15/05/2015

Demand 197.5 199.9

Langeled (Norway) 9.4 28.9

BBL (Netherlands) 1.6 0.0

IUK (Belgium) -34.3 -23.5

South Hook LNG 48.7 46.5

Week on Week Storage Levels So urce: R euters

Facility 22/05/2015 15/05/2015

Rough 25% 21%

MRS 22% 21%

SRS 14% 14%

South Hook 47% 43%

0%

50%

100%

150%

Percentage Fullness of Storage facilities Source: National Grid

Rough MRS SRS LNG

0

100

200

300

-100

-50

0

50

100

150

200

250 mcm/d mcm/d

30 day flow history for select supplies Source: National Grid

UKCS LNG Total Langeled BBL Net Inj/With Net IUK Import Sum Supply

Negative - Injection

Positve- Withdrawal

0 50

100 150 200 250 300 mcm/d

UK Demand of the Past Month Source: National Grid

LDZ Non LDZ Ireland Net IUK Export Net Injection

70 120 170 220 270 320 370 420 470

mcm

UK Demand Summary (mcm) - Actual Demand Source - National Grid

Cold Weather Demand Seasonal Normal Demand

Warm Weather Demand Actual Demand

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UK Power Weekly Summary

Power Summary: The near curve was in the firm grip of the bears for the majority of the week, with products taking direction from their corresponding NBP contracts. Gas prices were suppressed by a glut of LNG scheduled to arrive in the UK before the end of May which in turn prompted losses on power equivalents. However by Wednesday, the bulls took brief control, lifting prices on the back of colder weather conditions predicted for the beginning of June. This was temporary, as Thursday saw the downward trend resume in response to an upturn on the pound relative to the euro. By Friday, the strong LNG supply outlook returned to focus and products were lead further into negative territory. Similar direction was captured across the far curve, supported by movement on the wider fuels complex. Prices began the week softening in reaction to a weak Coal market. Meanwhile on Tuesday, a late sell off on the Carbon market helped supplemented the downward momentum. By mid-week, progress was rather muted as a bullish Brent crude market counterbalanced a strong pound. Towards the end of the week, the bears tipped the balance influenced by bearish movement on Coal and Brent crude. Prompt contracts were initially undermined by high wind and solar generation expected for Tuesday. However, bearish sentiment on corresponding NBP contracts on the back of session on session oversupply in gas system, provided additional pressure to products. This subsequently dampened the price of gas fired generation amid relatively low wind generation on Wednesday, which buoyed prices during the middle of the week. This was short-lived as the return of the Dungeness BR-21 nuclear reactor, helped weaken prices on Thursday. In spite of this by the end of the week, the bulls returned to lift products in response to a decline in wind production.

1.02

1.04

1.06

1.08

1.10

1.12

1.14

1.16

10

20

30

40

50 Ratio £/MWh

LEBA DA vs N2EX DA Sources: LEBA/N2EX

LEBA DA Base N2EX DA Average LEBA 30 Day Avg N2EX 30 Day Avg LEBA Peak/Base Ratio

40

42

44

46

48

50

52

54

56

£/MWh

130 Day UK Seasonal Baseload History Source: ICE

Win-15 Sum-16 Win-16 Sum-17 Win-17 Sum-18 Win-18

2

3

4

5

6

7

8

9

55

57

59

61

63

65

67

69

71

73

75

€/tonne $/tonne

Coal & Carbon Price History Sources: Spectron/Reuters

Coal $/tonne Emissions €/tonne

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Other Fuels Summary

0.69

0.7

0.71

0.72

0.73

0.74

0.75

1

1.02

1.04

1.06

1.08

1.1

1.12

1.14

1.16

EUR/GBP EUR/USD

Currency Movement Over Previous Month Source: Reuters

EUR/USD EUR/GBP

45

50

55

60

65

70

75

40

44

48

52

56

60

$/bbl p/th

Brent Crude vs NBP Front Month and Season Source: Reuters

NBP Fwd Month p/th NBP Fwd Season p/th Brent Fwd Month $/bbl

Other Fuels Summary:

Coal Bearish sentiment from weak Brent Crude market and a strong US Dollar against the Euro softened the price of coal for much of last week. Prices did firm a touch mid-week in response to the news that the Indian Adani Mining Company had secured buyers for the majority of coal it plans to produce from a large mine in Australia beginning in 2017. Yet, the week finished with the bears in control once again due to bearish influence from Brent Crude, which softened on the back of weak German economic data. Carbon Early in Week 21 the European Central Bank announced it would expand its Quantitative Easing programme which caused the Euro to soften against the US Dollar; and in turn weakened EUA prices considerably. It is possible that as prices fell so hard at the beginning of the week they broke key support levels, causing further technical selling. As the week ended soft German power prices and EUA auctions by EU nations helped the bears maintain control.

Source: Reuters

4

4.5

5

5.5

6

6.5

7

7.5

8

25.00

27.00

29.00

31.00

33.00

35.00

37.00

39.00

41.00

43.00

45.00

€/tonne €/MWh

France & Germany Year Ahead Power vs Front Year Carbon

France Y+1 Germany Y+1 EU ETS 2015

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Weekly Market News

Weekly Market Events:

News that the European Central Bank would expand its Quantitative Easing programme to support the Euro economy lifted stocks at the beginning of the week, to highs not seen for several years. As Week 21 progressed anxiety over the ability of the Greek government to repay its debts lessened and good Purchasing Managers Index data emerged from France, which helped to buoy shares further. The markets did slip a bit on Friday, however, on the back of a potential interest rate hike in the U.S.A this year.

UK LNG: TANKER: Al Kharsaah CAPACITY: 130 mcm EXPECTED: May 26th FROM: Qatar TO: South Hook TANKER: Umm Slal CAPACITY: 159 mcm EXPECTED: May 29th FROM: Qatar TO: South Hook TANKER: Al Hamla CAPACITY: 129 mcm EXPECTED: June 1st FROM: Qatar TO: South Hook Belgium LNG: TANKER: Wilforce CAPACITY: 93 mcm EXPECTED: May 26th FROM: Unknown TO: Zeebrugge TANKER: BM Pavilion Vanda CAPACITY: 99 mcm EXPECTED: June 4th FROM: Qatar TO: Zeebrugge Netherlands LNG: TANKER: Arctic Discoverer CAPACITY: 85 mcm EXPECTED: May 27th FROM: Norway TO: Rotterdam FOREX: 15/05/2015 – GBP:EUR 1.3730 22/05/2015 – GBP:EUR 1.4060

Temperature graph provided by MeteoGroup

Total Gas & Power are now tweeting market updates. You can find

our updates, along side other Total group tweets, at

twitter.co.uk/totalinuk

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Tem

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atu

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Weighted Temperatures Average Temperature D-1 Average Temperature SNT

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Glossary

APX Amsterdam Power Exchange. Run spot market platforms across Europe (formerly UKPX in the UK)

API American Petrolium Institute

ARA Amsterdam-Rotterdam-Antwerp. Coal Price Hub

Backwardation Description of a market when spot prices are higher than prices for futures

Base Load Constant power load for 24 hours per day

BBL Pipeline UK-Netherlands gas pipeline (from Balgzand, Netherlands, to Bacton, UK)

Beach gas The point at which gas is brought ashore to terminals before entering the NTS

Bid The price at which a party is willing to buy at

BOM (Balance of Month) The traded market for delivery for the remaining days in the month excluding the following day

Brent Crude Traded on the ICE and based upon North Sea Oil

Cashout The price charged for being imbalanced at the end of a period

CCGT Combined Cycle Gas Turbine. The most common type of turbine used for generating electricity from burning gas

Clean Spread The generating margin for Gas and Coal Fired electricity plant after the cost of EU ETS carbon allowances has been removed

Contango The natural market situation whereby the anticipated value of the spot market in the future is higher than the current spot market

Counterpart Party to a transaction

Crack Spread A type of commodity-product spread involving the purchase of crude oil futures and the sale of gasoline and heating oil futures

Curve Refers to the futures market. Includes everything beyond the current month going forwards

DA (Day-Ahead Market) The traded market for delivery for the following day

Dark Spread Represents the theoretical margin for a coal fired power plant. If a dark spread is positive, then the price of the power is higher than that of the

fuel and the spread is profitable

EFA Month The EFA (Electricity Forwards Agreement) Calendar

EU ETS EU Emissions Trading Scheme, one of the policies being introduced across Europe to reduce emissions of carbon dioxide

Firm Capacity Capacity purchased in advance guaranteeing the ability of shippers and producers to flow gas into UK terminals

GigaWatt (GW) A unit of power equal to 1,000MW/1,000,000kW

Hedge A trade to reduce the risk of adverse price movements in an asset

ICE (Intercontinental Exchange) London based exchange trading oil,gas oil and natural gas futures

IFA (UK-France Interconnector) 2000MW subsea power line connecting the UK and French grids

Kilowatt (kW) A unit of power equal to 1,000 Watts

Kilowatt hour (kWh) The amount of energy used by a 1kW load if this is consumed for an hour

Langeled Pipeline Pipeline bringing Norwegian gas into the UK at Easington

LEBA London Energy Broker Association

Liquefied Natural Gas (LNG) Natural Gas supercooled to form a liquid for ease of storage and transportation

Liquidity The ability of market participants to easily enter into or unwind a transaction helping parties to buy or sell relatively close to the previous sale

Long Refers the NTS or a counterparty holding more of a commodity than necessary for their current/future demand

MCM million cubic metres (1 mcm of gas = 358,694 therms)

MegaWatt (MW) A unit of power equal to 1,000,000 Watts

MMJ Million mega joules (1MMJ = 9,478 therms)

MWh The amount of energy used by a 1MW load if this is consumed for an hour

National Grid High Voltage electricity Transmission System for the UK

NBP (National Balancing Point) A notional point in the UK NTS used as a delivery point for gas rather than at the beach. For accounting and balancing purposes all gas is said

to flow through this point

NGT (National Grid Transco) Operator and owner of the UK Electricity Grid UK and Gas National Transmission System.

NTS (National Transmission

System)

The UK high-pressure pipeline system, owned by NGT, used to transport gas between terminals, storage facilities, large consumers and

regional sites

OFGEM Office of Gas and Electricity Markets - The Energy Regulator

Peak Load Electricity load between 07:00 & 19:00 Monday to Friday

Power Exchange Trading arena in which electricity can be bought/sold close to real time

Prompt Market Essentially the same as the Spot or Short Term Market

Settlement Period For the UK network each Half-hour during the day to which the system is balanced

Shipper Any company with the ability to transport gas around a pipeline network

Short Refers to the NTS or a counterparty holding less of a commodity than necessary to meet their current/future demand.

Spark Spread Represents the theoretical margin for a gas fired power plant. If a spark spread is positive, then the price of the power is higher than that of the

fuel and the spread is profitable

Speculation To hold a market position with no offsetting hedge to take advantage of anticipated market movements

Spot Market The market where energy commodities are traded in cash/physically and delivered immediately, not as futures

Spread The difference between the bid and offer price

System Buy Price The weighted average of the Offer prices of those accepted Offers in the settlement period

System Sell Price The weighted average of the Bid prices of those accepted Bids in the settlement period

Take or Pay The obligation of a customer to pay for a specified amount of gas whether this is taken or not

TTF Title Transfer Facility (The Dutch equivalent of the NBP)

Value at Risk (VAR) The measure of how the market value of a portfolio will decrease over a given period of time with a given probability

WD (Within-Day Market) The traded market for delivery on the current day (not available on the electricity market)

WDNW (Working Days Next Week) The traded market for delivery on the working days of the following week

Weekend Market The traded market for delivery for the following weekend

WTI Crude Oil (West Texas Intermediate) Traded on the NYMEX and the most commonly used oil benchmark.

Zeebrugge Hub The Belgian equivalent of the UK NBP

Disclaimer: The above information is supplied without any assumption of liability and you accept, by accepting the information, that we are not liable to you for your use of the information. While

reasonable endeavours are taken to ensure that the information in this report is obtained from reliable sources, it is not guaranteed for accuracy. The views set forth are solely of those of the

authors and not intended to provide advice or recommendations as the customer is solely responsible for its market decisions. Views expressed are subject to change without notice. Be aware

that views stated are incidental to the business of Total Gas and Power Ltd. and its affiliates which are engaged in swaps, forwards, options and cash transactions for their own accounts. TGP

assessments of Day Ahead, Weekend and WDNW contracts are conducted at 1630, or 1200 where appropriate on certain bank holidays, based on available confirmed trade data & firm bid to

offer spread data, and are published for information only. TGP assessments of DA, Weekend & WDNW contracts are not to be reproduced in any format.

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Glossary

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The above information is supplied without any assumption of liability and you accept, by accepting the

information, that we are not liable to you for your use of the information. While reasonable endeavours are

taken to ensure that the information in this report is obtained from reliable sources, it is not guaranteed for

accuracy. The views set forth are solely of those of the authors and not intended to provide advice or

recommendations as the customer is solely responsible for its market decisions. Views expressed are

subject to change without notice. Be aware that views stated are incidental to the business of Total Gas &

Power Ltd. and its affiliates which are engaged in swaps, forwards, options and cash transactions for their

own accounts.

The information contained in this document has been supplied to you by Total Gas & Power who are CIPS’s

Buying Energy Knowledge Partner. CIPS takes no responsibility for any loss or damage in any way arising

from your interpretation or use of this information.

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