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(Bloomberg) — European natural gas prices surged as flows from Norway slumped, highlighting the risk of relying too much on one major supplier.
Benchmark Dutch futures jumped as much as 7.7% on Monday, the most in a month. An unplanned outage means that Norway’s massive Nyhamna gas processing plant is unavailable. At the same time, flows into the UK’s Easington terminal, an entry point for a third of Britain’s total supply, plunged to zero.
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The outages show the pivotal role Norway plays in supplying Europe after most Russian pipeline deliveries were halted following the invasion of Ukraine. Even after the energy crisis, the market remain very sensitive to supply issues and traders quickly react to any deviation from the scheduled seasonal maintenance plans.
“The unplanned Norwegian outage is once again highlighting Europe’s dependency on imports,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S.
Meanwhile, LNG imports to Europe have declined in recent weeks amid higher demand in Asia, where a heat wave is increasing consumption of the fuel used for cooling. That’s driving competition for cargoes between Europe and Asia, said Hansen.
There was little public information available on Monday morning about the issues, exacerbating the anxiety in the trading community. Futures have gained for three consecutive months, and jumped by 18% in May.
Norwegian network operator Gassco A/S said that Nyhamna and Easington are unavailable until at least Wednesday after upstream and downstream restrictions.
Read: Europe’s Gas Supply Once Again Hinges on One Company
Dutch front-month futures, Europe’s gas benchmark, rose 7.87% to €36.91 a megawatt-hour at 10:24 a.m. in Amsterdam. The UK contract was up 6.7%.
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