European gas prices jump as Norway strikes add to supply woes

Equinor in Norway is temporarily closing three oil and gas fields after workers went on strike, exacerbating regional supply problems and pushing gas prices in Europe to a four-month high.

The strikes, which began on Monday evening, will affect 89,000 barrels of oil equivalent to a day of production in fields on Norway’s mainland shelf. The trade union is threatening more disruptive action in the coming days, with the Norwegian Petroleum and Gas Union warning that it could cut the country’s daily gas exports by 13%.

The latest disruption comes at a time when Europe has turned to Norway, its second-largest gas supplier, to close the gap left after cutting Moscow’s flow after Invasion of Ukraine Earlier this year. The form of supply has caused a rise in gas prices in Europe, contributing to a sharp rise in costs for businesses and households and burdening the region’s economy.

In recent years, Norway has supplied between 20% and 25% of gas demand in Europe, including the United Kingdom, according to Norwegian Petroleum.

Forecasts for the previous month compared to TTF, the European wholesale gas price, jumped on Tuesday by 8% to 175 euros per megawatt hour. This is the highest level since the beginning of March and five times the level of a year ago. Meanwhile, electricity prices in the region have reached the highest sustained level ever recorded, with maintenance problems at French nuclear power plants exacerbating the rise caused by rising gas prices.

The German government on Monday drafted a law to take shares in electricity companies that suffer from the skyrocketing price of imported gas as a sign of the crisis plaguing the European energy industry.

The Lederne Oil Workers Union in Norway said its members would extend the strike to three more production sites – Heidrun, Kristin and Aasta Hansteen – from Tuesday, meaning the disruption is expected to increase by 333,000 boe per day, of which 264,000 boe per day. Is a natural gas.

The controversy revolves around workers demanding wage increases to compensate for the rise in inflation, caused in part by rising commodity prices following Russia’s invasion of Ukraine.

The union is threatening to escalate further strikes on Saturday at three more oil fields if no solution is found.

Merchants are becoming increasingly pessimistic that Moscow will resume gas flow through Nord Steam 1, the pipeline between northwestern Russia and northern Germany, to full tilt once it returns from scheduled maintenance, scheduled to begin next week for 10 days.

Gazprom-backed state-run last month cut capacity by 60 percent on the line, blaming technical problems related to Western sanctions, but refusing to use alternative pipeline routes to maintain supply. Many European sources have blamed Russia for the gas supply and warned that the continent should resort to further cuts.

Goldman Sachs has raised its forecast to TTF because it “no longer sees” full restoration of gas flow from the Nord Stream 1 pipeline as the most likely scenario. It now sees TTF prices for 153 euros per MWh in the third quarter and 121 euros per MWh for the fourth quarter this year, up from 104 euros and 105 euros per MWh respectively.

In addition to bringing in Norwegian supplies, Europe has imported record quantities of liquefied natural gas, mainly from the US, to build gas storage supplies for the winter.

The International Energy Agency said in its quarterly report on the gas market that the continent’s rising demand for LNG to replace Russian pipeline supplies has developed around the world and led to a “particularly tight” global market.

“High European gas prices have turned the continent into a premium LNG market, dragging shipments from other regions, leading to supply tensions and destroying demand in a number of markets.”

He warned that Europe’s LNG needs “are expected to exceed supply capacity increases by 2022”.

Globally, the IEA now predicts that demand for gas has fallen by 0.5% this year and will remain “restrained” until 2025 due to rising prices, a sharp reversal of the pre-crisis trend when gas consumption rose sharply and often replaced coal in electricity generation.

European gas prices jump as Norway strikes add to supply woes Source link European gas prices jump as Norway strikes add to supply woes

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