Gas whips in Europe as infrastructure risks put nerves on edge


(Bloomberg) — European natural gas swayed as anxiety grew about the security of infrastructure that is key to ensuring supply to the continent.

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Benchmark futures cut gains after Norway’s grid operator said there were no gas transportation disruptions following a possible bomb threat at the Ormen Lange field and Nyhamna processing plant on Thursday. Production is normal and workers are returning to the site, Shell Plc said.

Prices had earlier risen as much as 9.2% on fears over the projects, highlighting the extent of the market’s nervousness. It follows similar changes earlier this week as scrutiny around energy infrastructure mounts after recent explosions at the stalled Nord Stream pipeline system put it out of commission indefinitely. Recently, a section of a crucial pipeline carrying Russian oil to Germany leaked in Poland, but authorities later said it was likely an accident.

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Traders are nervous about Russian President Vladimir Putin saying any energy infrastructure in the world is at risk after the Nord Stream explosions, which he said benefited the United States, Ukraine and Poland. The United States and its allies have rejected those accusations and suggest that Moscow may have been behind the underwater explosions.

This raises supply concerns just as Russia’s escalating war in Ukraine is putting the last pipeline route for Kremlin gas shipments to Western Europe at risk. For now, these flows remain stable, although at the low levels of recent months. But Moscow’s warnings about sanctioning Ukraine’s gas operator and the spate of missile strikes this week have European politicians on edge.

Dutch gas a month earlier, Europe’s benchmark, was trading 0.4% higher at €160.87 per megawatt-hour as of 11:25 a.m. in Amsterdam. The equivalent UK contract declined 0.3%, also moving between gains and losses.

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Norwegian facilities are key to supplying gas to Europe. The continent is already facing a winter with minimal gas from Russia, and any further disruption could mean widespread shortages and skyrocketing prices. Inventories are fuller than usual and liquefied natural gas imports ensure availability, but a cold snap or prolonged outage could make the situation precarious.

“Current supply plus inventories should be enough to meet demand this winter” even if Russian gas transit through Ukraine is halted, Morgan Stanley analysts said in a note, adding that the likelihood of a disruption has increased. increased. Still, Europe pulling in more LNG will constrain global supply next year, meaning greater risks for the continent next year, he said.

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