Gas prices in the European markets are rising once again, but this time the war in Ukraine has nothing to do with it, at least not directly. Yesterday, the cost of Amsterdam TTF’s European benchmark Title Deed Transfer Facility rose 40% due to the potential disruption to the global supply of liquefied natural gas from Australia, which had previously frightened operators who bet that prices would fall further. . First of all, it may be the employees of the Woodside offshore platforms that alone supply more than 10% of the world’s LNG each month. And so yesterday (August 9) prices in Europe reached their highest point since mid-June, rising from around 30 euros the previous day to over 43 euros per megawatt hour. The uptrend continued today. The value of the IGI index (Italian Gas Index), which was equal to 36.98 euros per Mwh on 10 August, also increased sharply from 28.51 euros yesterday.
The increase was triggered by reports that workers at major LNG plants in Australia are planning to strike to gain higher wages and better job security. Nearly all production workers at Australian energy giant Woodside’s North Rankin, Goodwyn and Angel LNG platforms could stop working early next week, as well as Chevron workers at the Wheatstone and Gorgon plants, reports Australian business newspaper The Australian Financial Review. Australia is not a major supplier to Europe, but shortages of supply may cause Asian buyers to gravitate towards the European market – hence a sharp rise in prices. In addition, supply from Norway, which has become the main natural gas supplier to the European continent after the war in Ukraine, is predicted to decrease due to the large-scale maintenance of local power plants, which could reduce Norway’s gas pipeline exports by over 40%.
Woodside hopes to avoid a strike, but has already put in place a contingency plan to secure supplies. “We hope that there will be no need to activate this plan,” said the group, which wants to restart negotiations to avoid the business interruption scheduled for mid-August. Its US rival, Chevron, is facing the threat of strikes from workers on offshore platforms in Western Australia, called by the same powerful union, the Australian Workers’ Union (AWU). The union warned that LNG exports, estimated at “hundreds of millions of dollars”, were at risk.
As the Financial Times explains, market movements have intensified as some traders bet on falling gasoline prices. The move highlights that although gas storage levels have risen close to targets set in the European Union, the energy crisis that has plagued the continent for nearly two years is not over yet and markets are still nervous about sensitive supplies.
While Australian LNG supply rarely comes directly to Europe, the EU has become increasingly dependent on seaborne global cargoes of this gas to replace Russia’s cut supply after the war in Ukraine. “Even if the gas tanks are full, that doesn’t mean everything is okay,” Callum Macpherson, Investec’s head of raw materials, told the paper. “It depends on the currently unknown winter,” he said, adding that there are still “significant risks” to the gas situation in Europe. Last year, the EU was the world’s largest LNG importer, forced to replace oil spills from Russian pipelines. Moscow once supplied about 40% of the bloc’s gas demand.
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Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
