The gas price in Europe jumped by 13%, exceeding 38 euros per megawatt hour, the highest level in six months.
In detail, benchmark Dutch gas futures rose to their highest this year. The trigger was an unplanned interruption at the massive Nyhamna gas processing plant in Norway. At the same time, Norwegian’s flows into Britain’s Easington terminal, an entry point for a third of Britain’s total supply, have plummeted to zero.
The breaks show the key role played by Norway in supplying Europe after most Russian pipeline deliveries were halted following the invasion of Ukraine. Even after energy crisis, the market remains very sensitive to supply issues and prices react quickly in case of deviation from scheduled seasonal maintenance plans. For this reason, the energy alert has never completely ended for European states.
Gas prices in Europe soar again
The energy alarm is rekindled in Europe. Norwegian gas shipments to the old continent decreased by 14 million cubic meters per day.
Meanwhile, also the LNG imports into Europe have fallen in recent weeks due to increased demand in Asia, where a heat wave is increasing cooling consumption. This has led to increased competition for cargo between Europe and Asia.
The surge in gas prices on Monday 3 June directly linked to Norwegian flows speaks of a still evident vulnerability. Norway is now the largest supplier of natural gas to Europe and last year accounted for the 30% of the block’s suppliesafter most pipeline deliveries from Russia were stopped.
The graph drawn up by Bruegel is clear in showing the key role of Norwegian supplies in the mix of European gas imports:
European gas imports
Evolution from 2021 to 2024
The black color represents the share of imports from Norway, which is now crucial for Europe.
The price surge “highlights the fragility of the European gas market and the growing dependence on a smaller pool of supply sources”Wayne Bryan, director of European gas research at LSEG, said in the Financial Times. “Until storage reaches the levels imposed by the EU, i European gas prices will remain highvulnerable and exposed to greater price volatility due to any interruption of supply”.
Same assessment as Jesper Johanson, CEO of Danish trader InCommodities A/S: “We Europeans depend on the rest of the world for our energy supply, and this is a vulnerable situation”.
