On Monday, Europe’s gas price jumped to its highest level this year. The price jump follows a sharp decline of Norwegian gas exports to Europe after the shutdown of the offshore Sleipner hub which halted operations at the Nyhamna onshore processing plant, Gassco said.
A crack was discovered in a two-inch pipeline onboard Norway's offshore Sleipner Riser Platform, said Gassco. While the crack is not considered dangerous, it remains unknown how long the repair will take. The skyrocketing cost of gas highlights the “increasingly pivotal nature” of Norwegian supplies after Europe rejected its use of Russian imports, the Financial Times reported.
While Nyhamna is able to process up to 79.8 mcm per day, the shutdown has resulted in a loss of 56.7 mcm as of Monday, said Alfred Hansen, the head of pipeline system operations at Gassco.
"The field operator will give us a more accurate estimate for how long it could take to repair, and we will then update our forecasts accordingly," Hansen said.
Since departing from Russian imports, Norway is now the single largest supplier of natural gas to Europe and made up 30% of the continent's supplies last year. While the price increase is sharp, Europe had a reportedly “comfortable” level of gas in storage with EU sites being more than 70% full as of Saturday which is the second-highest level on record for this time of year, the Financial Times reported.
“Even before the eruption of the Ukraine conflict, Norway was the second-largest gas supplier to the EU after Russia. Gazprom was the king of gas supplies to the EU, particularly the EU’s largest economy, Germany,” Dr. Mamdouh Salameh, an international oil economist and a global energy expert, told Sputnik in May.
“It is an acknowledged historical fact that Europe’s economies, particularly Germany’s, have been built since the 1970s on cheap and plentiful Russian piped gas until the US conned and pressured the EU to impose sanctions on Russia and ban its oil and gas exports," Salameh added.
The price surge has highlighted the “fragility of the European gas market and increased overreliance on a smaller pool of supply sources”, said Wayne Bryan, director of European gas research at LSEG. “Until storages close in on EU-mandated levels, European gas prices will remain elevated, vulnerable and exposed to heightened price volatility from any disruption in supply.”
The Financial Times adds that Asia is also depending on liquefied natural gas as a heatwave has raised the continent’s demand, forcing Europe to compete for LNG cargoes. But before the Ukraine war, Russian energy officials estimated that US LNG supplies were already 40 - 50% more expensive than Russian pipeline gas deliveries.