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Europe Natural Gas Prices Rise Again; Norwegian Strike Adds to Russian Pressure

Commodities Jul 04, 2022 08:02AM ET
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By Geoffrey Smith 

Investing.com -- European natural gas prices rose again on Monday as the prospect of a strike by Norwegian offshore gas field workers added to the woes of a market already battered by Russian supply cuts.

By 8 AM ET (1200 GMT), front-month futures for the Dutch TTF contract, which serve as a benchmark for northwest Europe, were up 8.0% at 159.73, up 8% from Friday's close and at their highest since the spike in prices that followed Russia's invasion of Ukraine in February.

Norway's gas output could fall by over 10% this week due to a strike by the Lederne labor union, who make up around 15% of the country's offshore petroleum workers who want a bigger pay raise to offset the impact of surging inflation. On Thursday, they had voted down a proposed wage agreement that had been negotiated by companies and union leaders.

The workers plan to begin a strike at three offshore fields on July 5 and to add three more fields the following day. A seventh field, Tyrihans, will have to shut down because its output is processed from the nearby Kristin field, which will shut down, according to Reuters.

The same strike will cut around 130,000 barrels a day off Norway's oil output. However, the impact will be greater on natural gas markets because of the vital importance of Norwegian supply, which has only grown since Russia - Europe's biggest supply source - started to cut shipments in retaliation for western sanctions that followed its invasion of Ukraine.

Fears have grown in recent days that Germany, in particular, will have to impose gas rationing this winter, shutting down a large part of its industrial base in order to ensure supplies to households and heating companies. German Trade Union Federation leader Yasmin Fahimi warned at the weekend that such measures could destroy certain sectors such as glassmaking and chemicals forever in Germany.

Russia has cut supplies to Germany by 60%, citing the failure of engineering group Siemens to return compression equipment after its routine maintenance. However, it has also cut supplies to Italy, which pass through a different pipeline, by the same amount. Supplies to Germany are set to fall - at least temporarily - to zero from next week, when the first string of the Nord Stream pipeline shuts down for a period of scheduled maintenance.

That will make it impossible for Germany to continue filling its storage facilities, which need to be at least 90% full by the start of the heating season in October in order to guarantee stable supplies, according to industry experts.

Europe Natural Gas Prices Rise Again; Norwegian Strike Adds to Russian Pressure
 

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Comments (3)
Andrei Danaila
Andrei Danaila Jul 04, 2022 9:58AM ET
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We from EU are providing WAR support to a country that Russia is fighting. Providing weapons that ********their soldiers. Regardless of the moral of the fact that Russia is attacking, the mechanic part of us providing weapons that ********their soldiers will not be something acceptable for them on long run. Not having access to their resources is absolutely a normal effect.
Brad Albright
Brad Albright Jul 04, 2022 9:58AM ET
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US stands with EU!
Aaron Banes
Aaron Banes Jul 04, 2022 8:41AM ET
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However, the Norwegian oil and gas industry representatives are not so optimistic unlike President Zelensky. According to experts, there are significant risks of relatively low profitability of common projects due to large-scale corruption in the gas sector of Ukraine.
Brad Albright
Brad Albright Jul 04, 2022 8:41AM ET
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According to what experts? And when were their assessments made? Before Zalinsky started instituting reforms?
John Dislias
HephaestusTrades Jul 04, 2022 8:19AM ET
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Stop the ridiculous war , We dont hate russia . The problem is political no hate between citizen . Only european union citizens are paying the sactions . The russians are ok .. we are against the sactions and the war
Brad Albright
Brad Albright Jul 04, 2022 8:19AM ET
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No hate? The Russian soldiers who are terrorizing Ukraine are just loving friends?
G D
G D Jul 04, 2022 8:19AM ET
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We hate them.
Levan Jackson
Levan Jackson Jul 04, 2022 8:19AM ET
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not loving friends. They're the only ones who haven't been infected with an ideology which prevents pretty much the whole rest of the world from seeing N@zis... they're trying to save us all... except for all of us who are N@zis... which apparently is everyone who disagrees with them. There is actually an astounding beauty to their logic. Russia has always seen, through their window, the flaws in the world.. nobody ever told them that Window is in fact a mirror.
Brad Albright
Brad Albright Jul 04, 2022 8:19AM ET
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Ascerbic sarcasm is often a good way to reveal the truth. Well done.
Levan Jackson
Levan Jackson Jul 04, 2022 8:19AM ET
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I get it from my dad, and his dad before him and so on and so forth... I come from a long line of sarcastic sons of... well I guess I can't say it out loud here... but yeah, sarcasm can be a great way to relay a point; and honestly, it's much more entertaining that way.
 
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