Norway’s government has stepped in to end a strike that has threatened gas supplies to Britain.
The labor dispute shut down oil and gas fields and was expected to cut gas supplies to Norway by almost 60 percent by the weekend.
Gassco, Oslo’s state-owned pipeline operator, warned that “in a worst-case scenario, supplies to the UK could stop completely”.
The workers demanded wage increases to cope with rising inflation, which was fueled in part by a surge in oil and gas prices following Russia’s invasion of Ukraine.
However, the Norwegian government has the power to intervene to end industrial disputes. The country’s labor minister, Marte Møs Persen, said: “When a conflict can have such large social consequences for the whole of Europe, I have no choice but to intervene in the conflict.”
Gas prices rose in recent days as strike action threatened to worsen an existing supply crisis, but their gains were halted on Wednesday after the announcement.
This respite from rising gas prices may be short-lived, however, as the key Nord Stream 1 gas pipeline from Russia to Germany is scheduled for maintenance from July 11 to 21.
Goldman Sachs said it does not believe flows through Nord Stream 1 will be fully restored after the work is completed.
The investment bank raised its forecasts for European natural gas prices to an average of 153 euros per MWh in the third quarter of 2022, 121 euros in the fourth quarter and 138 euros next summer. The Dutch wholesale gas contract for September delivery fell 7.5% to 161 euros per MWh on Wednesday.
European countries are scrambling to fill their gas storages before winter for fear that Russia will cut off supplies completely.
Britain gets about a third of its gas from Norway, with the rest from a combination of the North Sea, other parts of Europe and LNG imports from the rest of the world, including the US.
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Germany is far more dependent on Russian gas and fears are growing about the knock-on effect of a cut in gas supplies from Russia.
Deutsche Bank analyst Jim Reid said: “Economics Minister [Robert] Habeck talked about gas as a potential opportunity for Lehman Brothers, so the stakes are high. It really is a heavy cloud over European assets at the moment.”
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said Britain could do without Russian gas. He said: “The small hole that will be left by Russian imports falling to zero by the end of this year – as the UK government has promised – should be easily covered by increasing LNG imports from the US and Qatar.”
Separately on Wednesday, a Russian court told the Caspian Pipeline Consortium, which carries oil from Kazakhstan to the Black Sea, to suspend operations for 30 days. The pipeline is one of the largest in the world and exports about 1.2 million barrels per day. Despite the court order, exports continue to flow, Reuters reported.
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