Planned strikes in Norway drove natural gas in Europe to the highest level in nearly four months. Benchmark futures, already up over 200% since January, rose 10% just on Monday. Roughly 13% of Norway’s gas export capacity will be lost if the strike occurs. Three fields per day will be shut down under the planned strike, with a fourth field disabled due to its reliance on one of the shut down fields for processing of its product.
Norway’s gas supply to Europe has proven vital as Russian supplies have dwindled, ostensibly due to mechanical issues with their pipeline, and a US export facility was taken offline by an explosion which some have asserted bore hallmarks of a Russian cyber attack. The consequences have spread through Europe, as nations have desperately tried to focus their remaining supplies on filling reserve storage capacity necessary to get their nations through the cold of winter, often at the expense of industry and electrical generation. In some cases nations have even reopened shuttered coal-burning plants to supply needed electricity from coal, so all available gas supplies can be routed to storage.
Analysts at trading firm Energi Danmark wrote in a note, “Supply concerns are extremely high and the market continues to add risk premium. The situation will remain tense this week and we expect further increases if flows remain low.”
Dutch front-month gas futures rose 13% to 167.3 euros per megawatt-hour at 10:55 AM in Amsterdam – the highest intraday level since March 9th. The British equivalent rose 16%.
Russian gas exports dropped when first, several countries refused to comply with Russian demands that they pay for their gas in rubles, and Russia cut off their supply for non-payment. Then state-supplier Gazprom cut off the flows of gas from the Nord Stream pipeline to several other countries by up to 60%, citing the fact that sanctions prevented the service of a turbine critical to safely maintaining gas flows.
Next week, the Nord Stream pipeline is scheduled for a full shutdown to do yearly maintenance, which will last from ten days up to two weeks, and Germany has been questioning if the pipeline will even resume flows after that.
Making matters even worse, a Gazprom official has now publicly stated that they are looking at demanding payments in rubles for Liquid Natural Gas as well. Given the refusal of many nations to pay for gas in rubles for geopolitical reasons, that will further tighten supplies.
