In the past month, the situation of "gas shortage" in Europe has been very grim. First, nearly 1/5 of the total exports of liquefied natural gas (LNG) in the United States were suspended due to the explosion, and then Russia, the largest natural gas supplier in Europe, announced the closure of the "Nord Stream-1" pipeline for maintenance, and then Norway, the second largest natural gas supplier in the European Union, went on strike in the oil and gas industry yesterday (5th), which directly led to the closure of three oil wells in the country's North Sea.
Despite the latest announcement of the Norwegian government that all parties have agreed to end the strike, the benchmark price of the natural gas futures contract in northwest Europe still rose by 14% on the 5th to reach 172 euros ($177) per megawatt hour, which is also the highest level since the Russian-Ukrainian conflict.
Screenshot of CNN report
Comprehensive US CNN, Reuters and other news, affected by the situation between Russia and Ukraine, Europe is trying to reduce its dependence on Russian natural gas, and Russia is also gradually reducing supply to Europe. Germany, Europe's largest economy, has now declared a "gas crisis" and warned that it will not rule out the introduction of a rationing system to survive the coming cold winter. According to Eurostat, Norway was the second largest supplier of natural gas in Europe last year, after Russia, with supplies accounting for about 25% of total EU consumption. At this particular juncture, any sudden occurrence in Norway that leads to a decline in production capacity and a decrease in exports would be a huge blow to Europe's efforts to reserve natural gas.
Norway's state-owned energy company Equinor said it had closed 3 oil and gas wells after some employees went on strike on the 5th due to dissatisfaction with wages, which would result in norway losing about 89,000 barrels of oil production per day. According to the original expectations of the strike union, it was planned to continue to organize a strike today (6th), when another 3 oil and gas wells in Norway will be forced to stop production, which will bring about another 330,000 barrels of oil production per day. In addition, another strike is expected on the 9th, and Reuters estimates that 12 oil and gas wells will be closed at that time, which will affect 25% of Norway's natural gas and 15% of oil production capacity.
The Norwegian Oil and Gas Association warned that the strike would reduce Norway's daily gas exports by about 1 percent, a figure that could reach 56 percent if the strike lasted until the 9th. Eurofound, the EU's labour research institute, has also urged the Norwegian government to step in urgently, using controversial intervention rights to ensure export stability. "If the Norwegian government believes that the strike could threaten the 'life and health' of the population, it could theoretically mandate trade union leaders and Equinor to join the negotiating table."
Norwegian energy company Equinor accounts for 70 percent of the country's oil and gas capacity. Data map 丨 Reuters
Later in the day, the Norwegian government issued a statement saying that all parties had agreed to end the strike. Asked if the right to intervene was used, Norwegian Labour Minister Marte Mjoes Persen acknowledged it to Reuters. "Norway plays an important role in supplying natural gas to Europe, and the strike will have a significant impact on other countries such as the UK, Germany and other countries," he said. ”
On the other hand, while norway's strike tide has come to an end, Nord Stream-1, Russia's main channel for supplying natural gas to Europe, will still be maintained for 10 days from July 11. Gazprom said on June 14 that the pipeline could not work properly and the amount of gas delivered would be limited because the German Siemens failed to return the repaired Nord Stream-1 pipeline gas compressor parts on time.
According to S&P's analysis, the current flow of natural gas through Nord Stream 1 is only 40% of the original, and Russia has previously cut off the gas supply cooperation of three "unfriendly" countries and multiple companies such as Poland, so Europe is very concerned about whether the maintained Nord Stream-1 can be restored normally.
Unlike other European countries, Hungary received a commitment from Gazprom in June to continue to receive gas supplies under contract. Data map 丨 Xinhua News Agency
Carsten Fritsch, an energy, agricultural and precious metals analyst at Commerzbank, said in a report on the 4th that "we are more worried that after the repair work is completed, natural gas transportation may be further reduced, or even not recovered at all."
Current data from European gas infrastructure shows that the EU's gas storage facility inventory is 59 percent, which Fritz noted is about 3 percent lower than the same period in previous years. He warned that "(if Nord Stream-1 fails to restore supply after maintenance) will make it almost impossible for Europe to replenish enough gas stockpiles for the winter, and Europe will need further political measures to cut gas consumption" to this end.
It should be noted that in addition to the case of Russia and Norway, Alex Froley, an analyst at the independent commodity intelligence agency, believes that the bigger problem facing Europe should be the closure of large liquefied natural gas (LNG) plants in the United States.
On June 8, local time, an explosion occurred at Freeport LNG's plant in the Gulf of Mexico. Photo 丨 The Guardian
At about 11:40 a.m. local time on June 8, an explosion occurred at the freeport LNG plant in Freeport, Texas, USA, and although there were no casualties, production work was suspended. According to Vortexa, Freeport LNG is the largest exporter of LNG in the United States, and typically the plant produces about 18 percent of U.S. LNG exports.
Since the beginning of the Russian-Ukrainian conflict, Russia has reduced its supply of natural gas to Europe, and U.S. LNG exports are crucial for Europe. But Flori said [the Freeport LNG plant] was a major source of LNG supply in Europe this year, but after the explosion, "normal supply will have to wait until October this year at the very least."
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