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Oil Report

EUROPE GAS-Prices soar on Russian supply risk, Norwegian and UK outages

(Updates prices, adds analyst quote)

Aug 22 (Reuters) - British and Dutch wholesale gas prices rose sharply on Monday as the prospect of maintenance on the main Russian pipeline to Europe put markets on edge, while outages at Norwegian and UK gas fields also lent some support.

The Dutch contract for next day delivery rose 47 euros, or almost a fifth, to a record high of 292 euros per megawatt hour (MWh) by 1321 GMT

British gas for immediate delivery was up 138 pence, or 37%, to 503 pence per therm, and the day-ahead contract rose 119 pence, or almost a third, to 480 p/therm, both reaching a five-month high.

Russia will halt natural gas supplies to Europe via the Nord Stream 1 pipeline for three days at the end of the month, piling pressure on the region as it seeks to refuel ahead of winter.

“The three-day pause will once again raise fears that the Kremlin will weaponise gas supplies and use the maintenance as an excuse not to resume flows,” said Craig Erlam, analyst at OANDA.

Nord Stream 1 flows were steady on Monday, while eastward flows through the Yamal-Europe pipeline from Germany into Poland rose.

Exports of gas from Norway to Britain were expected to fall due to outages at some gas fields, but flows to continental Europe were steady.

Norwegian gas nominations to Britain dropped by 15 million cubic metres (mcm) per day to 55 mcm on Monday, compared to previous day.

“Ongoing planned maintenance at the Kollsnes processing plant (in Norway) and Troll field until the end of August, and increased residential and power-sector demand in the UK and continental Europe have also contributed to higher prices,” said Christos Anagnostopoulos, Commodities Analyst at Aurora Energy Research.

The UK system was under-supplied by around 5 million cubic metres (mcm), according to National Grid data, with heavy maintenance ongoing at UK Continental Shelf (UKCS) fields and terminals. However, UK gas storage was almost full.

Europe's gas storage sites were 76.9% full tmsnrt.rs/3dozVdq, getting close to a European Commission target of 80% by Oct. 1.

Meanwhile, peak wind generation in Britain was seen around 3.9 gigawatts (GW) on Monday and 3.6 GW on Tuesday, out of total metered capacity of nearly 20 GW, Elexon data showed.

Low wind is expected to boost gas burn demand in power generators.

In the European carbon market, the benchmark contract eased almost 5% from all time highs on Friday, dropping 4.88 euros to 93.13 euros a tonne.

Reporting by Bozorgmehr Sharafedin; Editing by Kirsten Donovan

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