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European Gas Prices Hit New High as Norwegian Rig Workers Expand Strike

Commodities Jul 05, 2022 09:06
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© Reuters

By Geoffrey Smith 

Investing.com -- Benchmark European natural gas prices hit a fresh three-month high at the open on Tuesday as workers in Norway's offshore gas industry voted to extend their strike to more fields.

By 2:45 AM ET (6:45 GMT), the Dutch TTF contract for August was at 166.6 euros a megawatt-hour, up 2.2% from Monday's close. It had hit 168.5 EUR/MWh at the open before paring gains. 

Norwegian oil and gas company Equinor (OL:EQNR) said earlier it will have to carry out controlled shutdowns of output at four more fields -  Heidrun, Kristin, Tyrihans and Aasta Hansteen - after workers rejected the mediator's latest proposals. 

Total production from Heidrun, Kristin/Tyrihans and Aasta Hansteen is around 333,000 barrels of oil equivalent per day, of which 264,000 boe per day is natural gas, according to Equinor. 

Workers with the Lederne union are pushing for higher pay to offset the worst inflation in decades.

The squeeze on Norwegian gas supplies comes at an acutely painful time for Europe. Russia has cut supplies entirely to countries including the Netherlands and Denmark and has more than halved supplies to its two biggest customers, Germany and Italy. There was, however, a modest improvement in the situation in Austria on Tuesday, where integrated oil and gas group OMV said that its shortfall of Russian gas had eased to 40% from 50% previously.

Germany in particular is scrambling to replace Russian gas volumes with an accelerated investment program in terminals for importing liquefied natural gas. State regulators on Monday gave their approval for the immediate start of construction for a floating regasification terminal in Wilhelmshaven near Bremen, which would cover 8.5% of German gas demand. Klaus-Dieter Maubach, CEO of German energy group Uniper (ETR:UN01), said he hopes the facility will be operational before the end of the coming winter.

Uniper is currently in talks with the federal German government for a bailout worth billions of euros to cover the losses it's making as it replaces contracted Russian gas with gas from the spot market.

European Gas Prices Hit New High as Norwegian Rig Workers Expand Strike
 

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