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European gas prices on Monday rose to their highest level this year after an outage at a gas processing plant in Norway, highlighting the increasingly critical nature of the country’s supply. Norway after the continent largely stopped relying on Russian imports.
The price of European benchmark TTF rose more than 38 euros per megawatt hour on the Intercontinental Exchange, up more than 13%, the highest level since early December. This is the latest sign that the market remains at risk. despite near-record levels of gas reserves in Europe.
Norway is currently the largest supplier nature Air to Europe and accounted for 30% of the bloc’s supply last year, after most pipeline deliveries from Russia were cut following Moscow’s full-scale invasion of Ukraine in 2022. The shutdown was unplanned in Norway is increasingly likely to cause a harsh reaction in the market.
The price hike comes despite Europe having a comfortable level of gas reserves. Storage facilities in the EU were more than 70% full as of Saturday, the second highest level on record for this time of year. The European Commission aims to reach storage levels of 90% by November, but analysts believe they could be full by summer.
Wayne Bryan, director of European gas research at LSEG, said the price increase “highlights the fragility of the European gas market and increases over-reliance on smaller supplies”. “Until stocks close to EU regulated levels, gas prices in Europe will remain elevated, vulnerable and at high risk of price volatility due to any supply disruptions .”
Price was ok following an upward trend since the end of May, after Austrian energy group OMV warned that Gazprom could suspend gas supplies following a court ruling involving the Austrian company, leaving pipeline supplies Russia’s return to Europe is suspected.
The outage in Norway occurred at the Nyhamna gas plant, which has a processing capacity of 79.8 million cubic meters per day. According to Gassco, Norway’s state-owned company that manages the country’s gas transportation system, the plant is expected to be offline for an “undetermined period of time.”
“Norway [outage] and events surrounding Gazprom’s customers were the main drivers [for] Gas prices in Europe,” said Tom Marzec-Manser, head of gas analysis at consulting firm ICIS. He added that the shutdown could cut Norway’s flows by more than 20%.
Asia is also attracting more liquefied natural gas to its shores as the heatwave boosts demand, meaning gas prices in Europe need to remain higher for the region to attract cargo. LNG chemistry.
“The winter global LNG balance shortfall only adds to the tightening, albeit for longer in the future, while Norwegian and Russian pipeline supplies is a more immediate concern.”
