Small crack on gas pipeline shocks up the European gas market

Thanh Hà |

The emergency repair of a pipeline on a Norwegian gas transmission plant is a harsh reminder that a small incident could also cause gas prices in Europe to skyrocket.

Helicopters carrying equipment and engineers arrived at sleipner's house 250km from the Norwegian coast to repair a small crack in a golf ball-width pipeline. The shaft of this gas field is an important connection point in the European gas network.

Gas prices have risen to a new high this year as Europe risks losing 20% of its gas imports from Norway.

Bloomberg pointed out that the problem with such a small pipeline could have such a big impact that it highlights Norway's current influence on European energy security.

With Europes growing dependence on Norway, any disruption could have a big impact on prices, said Adnan Dhanani, an analyst at RBC Europe.

sleipner's plant was at the center of a outage this week, operated by Norwegian gas giant Equinor ASA. This platform is located at the point where the 627km Langeled North gas pipeline meets the 523km Langeled South gas pipeline.

The plant and the pipelines link the Nyhamna gas processing facility in central Norway with the Easington port warehouse near Hull in the UK - the input point for a third of the UK's total gas supply.

Gas prices rose to 13% on June 3 but then fell after companies made clear their repair schedules. This highlights extreme moves in the European gas market.

Christopher Kuplent - head of European energy research at Bank of America - said that the price fluctuations have just occurred in the context of record-high gas reserves showing the level of tightening gas supply in Europe. This was not possible before when the Nord Stream pipeline and some other gas pipelines from Russia were still fully operational.

Samantha Dart, head of gas research at Goldman Sachs Group, said: been operating at top speed in the energy crisis to provide Europe with the most gas possible has led to pressure on infrastructure.

Some of the stress may have been mitigated or addressed by major maintenance efforts last year. However, recent unscheduled outages have shown some infrastructure vulnerabilities.

Last summer, Norway's Nyhamna gas processing plant was closed for a long time after detecting gas in its cooling system. The related Ormen Lange and Aasta Hansteen mines have also been suspended for extended maintenance. Uncertainty over such events could have a serious impact on gas prices in Europe.

In the latest incident, Norway increased gas exports to St. Petersburg. Ferguson in Scotland to compensate for gas losses. The terminal is the only other connection point where gas from the Norwegian mainland could enter the UK network and then export back to Europe.

Thanh Hà
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