Norwegian Gas Field Shut Down Due to Strike... Europe’s Gas Crisis Worsens

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] The closure of some oil and gas fields in Norway due to strikes is raising concerns that the natural gas supply crisis in Europe, which has deepened since Russia's invasion of Ukraine, will intensify further.

According to CNN on the 5th (local time), Equinor, Norway's state-owned energy company, announced that it temporarily shut down three sections of oil and gas fields due to workers' strikes the previous day. The strike is expected to disrupt the supply of about 89,000 barrels per day of oil and gas produced from Norway's North Sea continental shelf fields.

The Norwegian Oil and Gas Association warned that the strike could reduce Norway's gas exports by about 13% in the short term. Norway's oil industry union stated that if their wage increase demands are not met, they will carry out additional strikes at three production facilities starting from the 5th. If the number of production facilities involved in the strike increases, production of 333,000 barrels of oil and gas will be affected. If the strike expands, gas export volumes are feared to decrease by up to 25%.

As a result, the gas supply crisis in Europe, which heavily depends on Norway, is expected to escalate further. Norway is a major gas supplier to Europe, accounting for about 25% of Europe's demand for Norwegian gas, second only to Russia (39%).

Especially amid soaring gas prices in Europe due to supply restrictions from sanctions against Russia, the closure of Norway's gas fields has caused gas prices within Europe to skyrocket. On this day, the gas futures price at the Netherlands TTF exchange, a major indicator of European natural gas prices, surged 8% from the previous day to 175 euros (about 236,000 won) per megawatt-hour (MWh). This is the highest level since March and more than double the 84.77 euros recorded on the 13th of last month.

Previously, with the delay in U.S. LNG exports caused by a fire at the Freeport LNG terminal in Texas, concerns are growing that if the strike at Norway's gas fields prolongs, Europe's gas supply and demand situation will become even more severe.