Page 9 - EurOil Week 28 2022

EurOil PERFORMANCE EurOil

European gas prices soar on Russian,

Norwegian supply cuts

NORWAY NATURAL gas futures at European hubs have LNG supply. Shell informed customers on July
soared in recent days on the back of Russia’s clo- 11 that no cargoes from the Prelude LNG plant
The impact of sure of the Nord Stream pipeline and Norway’s in Australia would be delivered until July 21, as a
Russian cuts has shutdown of a key gas field as a result of leaks. result of a union strike. Meanwhile, the Freeport
been compounded by These outages have coincided with a continuing LNG terminal in the US, a key source of supply
Norwegian outages and summer heat wave, as well as several supply dis- for Europe, is not anticipated back up and run-
a summer heatwave. ruptions elsewhere in the world. ning until October at the earliest, after being
The August contract at the Dutch TTF gas closed last month due to an explosion.
hub hit €184 per MWh, or $1,970 per 1,000 EU gas storage facilities are currently 59%
cubic metres, at just after 11:30 GMT on July 13, full, Norwegian consultancy Rystad Energy
up from an average of €172.6 per MWh during estimated in a research note on July 13. If Nord
the previous session of trading. This was after Stream resumed operations on time and at 100%
Gazprom closed the Nord Stream pipeline on capacity, assuming the return of a repaired tur-
July 11, for annual maintenance. The scheduled bine from Canada, then the EU will reach its goal
downtime is only meant to take 10 days, but of filling its storage facilities to 80% of capacity by
European leaders have expressed fear that Rus- November 1, in line with a target mandated by
sia could leave the pipeline offline for longer, to the European Commission. But if the pipeline
exert pressure on Europe against the backdrop of continues working at reduced capacity, as it was
the war in Ukraine. before its closure, then Europe will only achieve
A day later, Norway’s Equinor announced 72% storage capacity by the end of October.
it had partially closed the Sleiper gas field, after “If Nord Stream 1 were to stop exports com-
discovering two leaks. Norwegian gas transport pletely after the maintenance on July 21, EU stor-
operator Gassco estimates that the outage led to a age levels would reach only around 65% before
drop in Norwegian production of 16.9mn cubic winter, creating a real risk that the continent
metres per day, equivalent to 5% of the country’s could run out of gas during the heating session,
total, based on the level in May. adding further upside to the currently elevated
There have also been several disruptions in market,” Rystad said. ™

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