RTRS:UK gas prices rise as maintenance knocks out supply
* North Sea output drops as maintenance bites
* LNG tankers steam toward UK
* Rising oil price may drag on deliveries
LONDON, Aug 23 (Reuters) - British prompt gas prices rose on Thursday as supply shortages caused by pipeline maintenance in British and Norwegian waters tightened the transmission network, while rising oil prices lifted forward contracts.
UK day-ahead gas prices rose 0.40 pence to 56.50 pence a therm, guided higher by gas shortages, while the month-ahead gas edged slightly higher.
Domestic gas output dropped due to the start of a 25-day scheduled maintenance outage at Shell's terminal in St Fergus, while an entry point for Norwegian gas into the FLAGS pipeline also went offline.
Aggravating tight supplies, Norway's Kolsness gas processing plant that supplies a major import artery into the UK shut for maintenance last week.
As a result, flows via the Norway-Britain Langeled pipeline dropped to about 20 million cubic meters/day.
UK storage sites pumped gas into the network to counter offshore supply losses, while liquefied natural gas (LNG) terminals were nominated to send out 63 mcm/day.
A steady stream of deliveries from Qatar has topped up terminal inventories and elevated output especially from the South Hook terminal in Milford Haven, Wales.
Weak demand and slumping prices for LNG in Asia have freed up more cargoes for European markets, explaining the recent uptick in deliveries.
"In terms of LNG supply, the winter looks brighter for the UK," said on gas trader.
"But the recent rise in oil prices could support LNG prices in Asia, which may mean that Europe again becomes uncompetitive," he said. The price of LNG imports into Asia are linked to oil, while British imports are tied to openly traded gas markets.
Oil prices rose by more than a dollar on Thursday to $116 a barrel.
Further forward, the benchmark winter 2012 gas contract rose 0.35 pence to 67 pence.
Gas demand was expected to be 176 mcm on Thursday, with supplies running at 168 mcm/day, according to National Grid.
In the power market, day-ahead baseload electricity traded rose 75 pence to 42.50 pounds per megawatt hour, tracking sentiment on gas markets. (Reporting by Oleg Vukmanovic; editing by Keiron Henderson)
