The European gas market was again very turbulent this week. As the disruptions to Norway's gas infrastructure continue longer than planned, the gas price experienced significant spikes. In addition, the Asian demand for LNG remains high due to the higher temperatures. Nevertheless, the filling of European gas reserves is still going well.
The gas price continues to fluctuate over the week. On Wednesday, June 14, the TTF stood at €38,31 per megawatt hour. One day later, the gas price was at the highest level in three months, at €41,15. On Monday, June 19, the gas price was the lowest in a week, at €34,90.
This week, disruptions to the Norwegian gas infrastructure are causing significant upward price pressure. Currently, the Nyhamna gas processing facility is still inactive. The gas field should have revised its production again last week, but on June 15, owner Shell announced that maintenance will take more time. Hydrogen was found during cleaning of the cooling system. Due to the new defect, the line will be shut down for at least another month. However, the question remains whether the July 15 deadline will be met. According to Shell, resolving the defect is complex and other work can only be resumed once the disruption to the cooling system has been resolved. As a result of the news, the TTF reached its highest point of the week.
This is a major setback for European gas importers, as Norway is Europe's largest supplier. Nyhamna processes the gas from two large fields, the Ormen Lange and Aasta Hansteen fields. Together, these gas fields supply almost 80 million cubic meters of gas per day to the European Union. That is almost 24% of the maximum Norwegian export capacity of 340 cubic meters.
Price seems to be rising again
The warm weather remains one of the main reasons for the higher gas price. Because temperatures in Asia and Europe are high at the same time, gas demand is currently high on both continents. As a result, there is stiff competition for LNG imports. Temperatures will be slightly lower in Europe in the coming weeks. In general, temperatures of around 24 degrees are expected. However, Asia is in the grip of a severe heat wave. For example, temperatures in Beijing are structurally above 34 degrees. Temperatures of around 39 degrees are expected on several days and a single day a temperature of 41 degrees is even expected. If these weather forecasts come true, Asian gas demand will increase further in the near future, making it even more difficult for Europe to purchase LNG.
Filling of gas supplies is going well
Despite the greater Asian demand for liquefied gas and the lower Norwegian supply, the filling of European gas reserves is still going well. According to the latest interim figures, European gas reserves are 74% full. This means that the European Union is already more than halfway to its filling target of 90% on November 1. The market therefore expects that the European filling targets will be largely exceeded.