"Sudden 'Gas Outage'! European Natural Gas Soars 13%"

Norway's sudden natural gas supply disruption sends shockwaves through the European gas market.

Due to an unexpected interruption in the transportation of natural gas from Norway, European natural gas prices have soared to their highest levels this year, highlighting the risks of the region's over-reliance on a single major energy supplier.

On Monday, the Dutch benchmark natural gas futures price surged by more than 13%, marking the largest increase this year. UK natural gas futures rose by 15%, the largest increase since October last year.

It is currently unclear how long the unexpected shutdown at the large Nyhamna gas processing plant in Norway will last. Meanwhile, the flow of Norwegian gas to the UK's Isington terminal has plummeted to zero.

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This outage demonstrates the pivotal role Norway plays in Europe's natural gas supply following the disruption of most pipeline gas transportation from Russia to Europe due to the Russia-Ukraine conflict. Even after the energy crisis, the market remains highly sensitive to supply issues, with prices reacting swiftly to any deviations from the scheduled seasonal maintenance plans.

Gassco Senior Vice President Alfred Skar Hansen stated via email that Norwegian state oil company Equinor ASA is currently investigating the root cause of the problem. He said the issue might be with a section of the pipeline connecting the North Sea Sleipner gas field to Easington and Nyhamna.

Gassco is the main operator of Norway's natural gas transportation pipelines and related facilities, primarily responsible for transporting natural gas from the Norwegian continental shelf to other European countries.

Skar Hansen said, "It is not entirely clear how long it will take to repair."

The rise in European natural gas prices indicates that despite the region's gas storage facilities being over 70% full and the slow recovery of European industrial demand, the market is still susceptible to extreme fluctuations. European natural gas futures have risen for three consecutive months, with an 18% increase in May.

Ole Hansen, Head of Commodity Strategy at Saxo Bank, said, "The unexpected shutdown of Norwegian gas once again highlights Europe's dependence on imports."Gassco stated on its website that due to upstream and downstream constraints, the Nyhamna gas processing plant in Norway and the Ettington terminal in the UK will not resume operations until at least Wednesday.

In recent weeks, there has been a decline in liquefied natural gas (LNG) imports in Europe, while demand in Asia has increased due to heatwaves leading to higher energy consumption for cooling purposes. According to Hansen from Saxo Bank, this has intensified the competition between Europe and Asia.

In the electricity market, prices indicate that Germany's day-ahead electricity prices soared to €114.25 per megawatt-hour, the highest level since January. The day-ahead contract prices reached their highest since December in last Sunday's auction. Electricity prices for the coming month also rose on Monday.