Troubles in Norwegian gas fields deal another blow to Europe

The intraday spike was the highest since the early days of Russia’s invasion of Ukraine, which began on Feb. 24 and briefly sent prices to a record near €225 in early March.

The euro plunged to its lowest level against the US dollar since late 2016, as the currency bloc still limped out of a near-existential sovereign debt crisis.

The Norwegian strikes will now go into mediation, but could have cut shipments to Europe in half if the action had intensified as some feared.

“When the conflict can have such significant social consequences for the whole of Europe, I have no choice but to intervene in the conflict,” Norwegian Labor Minister Marte Mjos Persen said in a statement. a statement.

Norway’s foreign ministry said Oslo “must do everything in its power to help maintain European energy security and European cohesion against Russia’s war”.

Norway satisfies about 25% of European demand. Its gas fields have become increasingly critical as Moscow tries to exploit Europe’s dependence on Russian supplies as a way to weaken Western support for Ukraine.

Russia has cut off Bulgaria, Poland, Finland, Denmark and the Netherlands, after refusing to comply with state supplier Gazprom’s demand to be paid in roubles.

Today, Goldman Sachs warned that Russia’s planned July 11-21 maintenance work on Nord Stream 1, the main pipeline delivering Russian gas to Europe, could become a permanent supply disruption.

“While we originally assumed a full restoration of NS1 streams after its next maintenance event, we no longer consider this to be the most likely scenario,” Goldman analysts said in a note.

They forecast a TTF gas price of 153 euros per megawatt-hour in the third quarter, but said the price could rise again above 200 euros in the “worst case scenario” for Nord Stream supply.

Eurozone woes

Goldman’s warning echoes the German government’s own fears. Berlin is rushing legislation through parliament to bail out and nationalize its struggling energy companies.

“We will not allow a systemic effect to occur on the German and European gas market, because then domino effects would start and the collapse of one company could affect other sectors or even the security of supply in its together,” said Economy Minister Robert Habeck.

German companies would also be allowed to pass on higher prices to consumers. It could deepen a cost of living crisis that is already likely to undermine confidence and demand – just as the European Central Bank is forced to raise interest rates to fight inflation.

Rating agency S&Last week, P lowered its forecast for eurozone economic growth next year to 1.9% from a previous forecast of 2.2%. He expects inflation of 7% this year, remaining above 3.4% next year.

“Consumers are starting to feel the pressure on their purchasing power, especially as rising employment and wages are not enough to offset rising prices,” S.&P Marion Amiot, senior economist at Global Ratings.

Europe is rushing to fill its gas storage tanks ahead of winter, including recovering liquefied natural gas (LNG) cargoes and capacity from floating terminals.

The International Energy Agency said in its quarterly report, released on Wednesday (AEST), that Europe was absorbing LNG production from other regions – “resulting in supply strains and demand destruction across several markets”.

The IEA said that a slowdown in the commissioning of additional liquefaction capacity – due to low investment when prices were low, as well as the COVID-19 pandemic, “increases the risk of prolonged tight market conditions”.

Europe would be responsible for 60% of global LNG trade growth over the next three years, although overall the IEA expects growth in global LNG consumption to gas slows down markedly.

Russian pipeline exports to the EU would fall by more than 55% by 2025 compared to 2021, the IEA said.

As westward flows decline, the IEA has estimated that it will take Russia at least a decade to increase its gas exports to Asia to the 155 bcm it has exported to Asia. EU last year – and even that would depend on Russia’s access to the capital needed to build more infrastructure.

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