Norwegian state energy company Equinor said it had closed the fields after some of its employees went on strike over a wage dispute.
The three fields produce the equivalent of about 89,000 barrels of oil a day, more than 30 percent of which is natural gas, Equinor said in a statement.
Norway was the second largest source of natural gas in Europe last year, just behind Russia, according to Eurostat data. The disruption comes at a critical time for the region.
Europe is trying to reduce its dependence on Russian exports, which are already being reduced by Moscow. Any sustained drop in Norwegian production could be a major blow to efforts to replenish gas stocks before winter, as well as increase the risk of a catastrophic energy shortage.
Germany, the region’s largest economy, has already declared a “gas crisis” and warned that it cannot rule out the introduction of rationing to spend the winter.
News of the strike helped raise European natural gas futures prices by 5% to 172 euros ($ 177) per megawatt hour, Intercontinental Exchange data showed. This is the highest price since early March, the days after the invasion of Ukraine by Russia.
There may be worse to come.
On Wednesday, Norwegian workers will go on strike again, leading to the shutdown of three additional camps, Equinor said. These fields produce the equivalent of about 330,000 barrels of oil a day, of which almost 80% is natural gas.
Another strike is scheduled for Saturday, which according to Reuters estimates could close about a quarter of Norway’s gas production and 15% of its oil production. Equinor said the impact of the third day of strikes “is still unclear.”
The country’s gas exports will fall by 60% during the three-day strike, the Norwegian Oil and Gas Association said on Tuesday.
“Deliveries to Norway account for a quarter of Europe’s energy supply, and Europe is completely dependent on Norway’s delivery as a nation at a time when supply cuts to Russia have created a very tight market for natural gas,” he said. the association in a statement.
The Norwegian government could, in theory, force union and Equinor leaders to the negotiating table if it believes the strike could threaten the “life and health” of the population, although the intervention has been controversial in the past, according to Eurofound, an EU trade union. research agency.
A spokesman for the Norwegian Ministry of Labor told CNN Business that “it is the responsibility of the social partners to find a solution to any conflict” and made no further comment on the dispute.
An uncertain winter
The Norwegian strike comes almost three weeks after Russia reduced gas flows to Europe via the Nord Stream 1 pipeline and cut three EU countries and several energy companies for refusing to pay in rubles, instead of euros or dollars.
Gas flows through Nord Stream 1 currently operate at only 40% of capacity, according to an analysis by S&P Global Platts.
To add to the uncertainty, deliveries through the pipeline will be completely stopped for 10 days from the start of next week to do maintenance work.
“The concern is rather that gas shipments may be further reduced or not even resumed at all after maintenance work,” wrote Carsten Fritsch, an energy, agriculture and precious metals analyst at Commerzbank, in a note this Tuesday.
“This would make it virtually impossible to replenish European natural gas stocks for next winter and would require more far-reaching policy measures and cuts in gas consumption,” he added.
Gas storage facilities in the European Union are about 59% full, according to data from Gas Infrastructure Europe. That’s about three percentage points below the usual storage levels for this time of year, Fritsch said.
He added that if the strikes in Norway continued, the “already narrow” European gas market would worsen, causing further rises in gas prices.
Bigger headache
Alex Froley, an analyst at Independent Commodity Intelligence Services, told CNN Business that the biggest problem facing Europe was the closure of a major liquefied natural gas (LNG) plant in the United States.
A fire at the Freeport LNG facility in Texas last month has temporarily halted production. Typically, the facility produces about one-fifth of U.S. LNG exports, according to analysis firm Vortexa. In recent months, Europe has become increasingly dependent on LNG imports to offset the reduction in Russian natural gas supply.
“Demand for gas for heating is greatly reduced in the summer, and Norway always does some maintenance in the summer, so it’s not an immediate physical problem for the market to see some reductions,” Froley said.
“[The Freeport LNG plant has] has been a major source of supply for Europe this year, and is not expected to return until October as soon as possible, ”he added.