Norway Launches Major Gas Pipeline Maintenance, Impacting Supply

Norway, Europe’s largest gas supplier, has commenced its annual maintenance on essential gas fields, processing plants, and pipelines. This work, which is scheduled to continue through mid-September, will significantly reduce gas flows from the country, affecting the overall supply to Europe.

Maintenance activities have already begun this week at the Nyhamna processing plant, with additional work set to start this weekend. The maintenance of the giant Troll gas field in the North Sea, Europe’s largest gas-producing field, along with the Kollsnes onshore processing plant, is scheduled to take place on Saturday and Sunday. According to estimates, these maintenance efforts are expected to slash Norway’s gas supply by approximately a third during the first half of September, with most work anticipated to be completed by September 18.

Despite the reduced gas flow, analysts indicate that the planned maintenance activities have already been factored into Europe’s benchmark natural gas prices. The TTF index, which serves as a reference for gas trading in Europe, has seen a downward trend in recent weeks. Analysts do not foresee significant price spikes unless the maintenance extends beyond the scheduled completion date.

Europe’s current gas supply situation has been somewhat alleviated due to weak spot liquefied natural gas (LNG) demand from Asia. European buyers have faced minimal competition from Asian importers, leading to lower premiums for cargoes. This summer, the European Union (EU) has benefited from a decline in LNG demand, particularly from China, which is projected to experience its tenth consecutive month of reduced demand compared to the previous year.

As of now, EU gas storage levels stand at nearly 77% capacity, which is below the five-year seasonal average of 84%. Despite this, natural gas prices have remained under pressure due to ample LNG supply. On Thursday, the TTF price settled at 3% lower, even as Norwegian gas flows to Europe fell to their lowest levels since mid-July due to the ongoing maintenance efforts.

Strategists from ING, Warren Patterson and Ewa Manthey, noted on Friday that while maintenance in Norway will impact supply, current market conditions are unlikely to lead to dramatic price increases in the short term.

As the EU prepares for the winter months, the situation underscores the delicate balance between maintenance schedules, market demand, and pricing strategies in the evolving energy landscape.