(Montel) Any unforeseen maintenance that disrupts Norwegian gas supplies to the rest of Europe would have a devastating impact on markets, said an analyst at Swedish bank SEB.
“If there are any surprises during maintenance work on the Norwegian continental shelf, the consequences could be devastating,” said SEB commodity analyst Ole Hvalbye on Thursday at Montel’s Nordic Energy Day.
While market prices have already factored in the possibility of the Russian gas pipeline through Ukraine being shut down by the end of the year, maintenance work in Norway, which would be more costly than expected, would be “quite difficult to manage,” he added.
This is particularly worrying as economic growth in Northeast Asia is likely to lead to rising LNG imports this winter, Hvalbye noted.
European stocks are at healthy levels, Hvlabye noted, but a cold winter could result in those supplies being depleted within a few months, he said.
In fact, gas storage facilities across the region were operating at an average capacity of 92 percent, well above the EU target of 90 percent by November 1.
If there were no surprises, high inventories would likely keep prices close to current levels, Hvalbye said.
30-35 EUR/MWh is the “new normal”
Hvalbye said that 30-35 EUR/MWh “will probably be the new normal for European gas prices.” The European benchmark front-month contract on the TTF hub was last at around 38 EUR/MWh.
“We are not out of the woods yet. The energy crisis is still ongoing. We will never go back to where we were in 2020,” said Hvalbye, referring to the time when prices were well below EUR 20/MWh at this time of year. In 2022 they reached their peak at EUR 345/MWh.
However, Hvalbye predicted that prices would begin to fall from 2027 as more LNG export capacity currently under construction comes into operation.
According to SEB figures, annual global LNG supplies are expected to rise from around 400 tonnes to over 600 tonnes per year by 2030.
“Prices will fall between 2028 and 2035. But that won’t happen before 2027,” he said.
