Norway Gas Shutdown Sends European Prices Soaring

Norway's gas exports to Europe drastically fell due to a shutdown at the Sleipner hub, leading to the closure of the Nyhamna processing plant. The disruption caused European gas prices to spike to their highest levels in 2023. Efforts are underway to repair the issue and mitigate supply impacts.

Norway's gas exports to Europe fell sharply on Monday as a shutdown of the offshore Sleipner hub halted operations at the Nyhamna onshore processing plant, pipeline operator Gassco said, lifting European prices to their highest level this year. The outage was caused by a crack discovered in a two-inch pipeline onboard Norway's offshore Sleipner Riser platform, the company said. It was not yet known how long this will take to repair, but the situation is not considered dangerous, it added.

"This has big consequences from a supply perspective," Alfred Hansen, head of pipeline system operations at Gassco, told Reuters. Norway in 2022 overtook Russia as Europe's biggest gas supplier after Moscow's invasion of Ukraine severed decades-long energy ties.

Sleipner Riser is a connection point for the Langeled North and Langeled South pipelines connecting the Nyhamna plant on Norway's west coast with the Easington terminal in northeast England. Both terminals were shut on Monday, transparency data showed, with Norwegian gas supply nominations falling to 255 million cubic metres (mcm) per day, from 300 mcm/day nominated on Friday, according to Gassco data.

While options exist for bypassing Sleipner, this is time-consuming and not without risk, Hansen said. Europe's benchmark gas price, the Dutch front-month contract , was up 7.2% to 37.1 euros/MWh by 1214 GMT, down from an earlier peak of 38.56 euros, its highest level since early December.

Gassco is working with Sleipner operator Equinor to resolve the situation, a Gassco spokesperson said separately. "We are working... with a plan for repairs and with a plan for compensatory measures to deliver the highest possible volume to Europe," the spokesperson said.

While Nyhamna plant operator Shell confirmed the issue was related to Sleipner, an Equinor spokesperson referred any questions on the issue to Gassco. Nyhamna is able to process up to 79.8 mcm per day, with the current shutdown resulting in a real loss of 56.7 mcm on Monday, according to Hansen. Britain's Easington terminal has a capacity of 72.50 mcm/day.

Both plants will also be offline on Tuesday, an update on Gassco's website showed.

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