Norway gas exports to Europe rise amid strike as other fields ramp up

07/10/2020 09:19 LNG


European gas markets are currently well-supplied, with plenty of gas in storage. Prices are at seasonal lows due to the impact of mild winters, plentiful LNG supply and reduced energy demand during the coronavirus pandemic

Norwegian gas supplies to Europe edged up on Tuesday as other fields ramped up output amid a workers' strike that has cut the country's petroleum output capacity by about 8 per cent.

Six Norwegian offshore oil and gas fields were shut on Monday as more workers joined a strike over pay, curbing gas flow volumes by about 35 million cubic metres (mcm).

The main European importers of Norwegian gas are Britain, Germany, France, the Netherlands and Belgium.

European gas markets are currently well-supplied, with plenty of gas in storage. Prices are at seasonal lows due to the impact of mild winters, plentiful LNG supply and reduced energy demand during the coronavirus pandemic.

The market in Britain, which imports around 60 per cent of its gas from Norway, saw prompt prices rise up to 10 per cent on Monday due to the production loss but they slumped on Tuesday as smaller fields compensated and higher wind output meant gas-to-power plants did not need as much gas.

Flows to Britain and continental Europe fell 17 mcm on Monday but were up by 7 mcm on Tuesday.

"We believe flexible fields have been ramped up to compensate production loss due to the strike," said gas analysts at Refinitiv.

It is likely that Equinor, which operates four of the fields affected by the labour strike, has already replaced some lost output, according to Jane Rangel, analyst at consultancy Energy Aspects.

"Given that we are in early October, Equinor should have scope to replace lost flows by ramping up output from flexible fields like Troll and Oseberg," she said.

However, that flexibility to ramp up production would shrink if the strikes were prolonged, "as those fields are usually running much harder as we move into peak winter", she added.

Norway's Lederne labour union said on Tuesday it had made a new proposal to oil companies in an attempt to resolve a dispute over wages and thus end the strike, although a rejection could see the strike escalate further.

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