The European energy crunch is set to worsen this week after Norwegian offshore oil and gas workers went on strike, threatening to sever the Scandinavian country’s energy supplies to the UK and Europe, according to Reuters.
As much as 1,117,000 barrels of oil equivalent, or 56% of daily natural gas exports, while 341,000 barrels of oil would be lost by Saturday if strikes continue closing down fields, the Norwegian Oil and Gas (NOG) employer’s lobby warned.
“The strike has begun,” Audun Ingvartsen, the leader of Norway’s oil workers’ union, Lederne, said in an interview. He added the strike would escalate as workers pressure oil/gas companies to increase wages and benefits amid the worse inflation in Europe in decades.
Norway is Europe’s second-largest energy supplier after Russia. The timing of strikes comes as European countries rush to inject NatGas supplies into storage ahead of the winter, and Russian energy giant Gazprom significantly reduced Nord Stream flows to Europe. Gazprom plans to halt Nord Stream flows for routine maintenance from July 11 for ten days.
Norway’s Gassco, a state-owned pipeline operator, explained to Financial Times, “in a worst-case scenario, deliveries to the UK could stop totally.”
“The UK has also become a key conduit for moving supplies on to Europe over the summer, with its export pipelines to Belgium and the Netherlands running at speed to send excess imports of liquefied natural gas and Norwegian supplies into continental storage ahead of the winter,” FT said.
News of the strikes sent British wholesale NatGas price for day-ahead delivery up 16%.
Strikes began on Monday and knocked offline 89,000 barrels of oil equivalent a day of production at three fields on Norway’s continental shelf. Three more fields could be closed by Wednesday, affecting even more production. If the labor union and energy companies don’t come to a resolution on wages, a total of 14 sites could be offline by Saturday, representing a 56% reduction in NatGas exports.
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