HomeNewsYears of limited gas supply spell price spikes, Equinor says

Years of limited gas supply spell price spikes, Equinor says

9/20/2023

(Reuters) - A protracted lack of supply in the gas market means even minimal disruption will cause prices to spike, a senior executive at Equinor, Europe's largest supplier of natural gas, said on Wednesday.

"This market is still very tight and very nervous," Irene Rummelhoff, Equinor's head of marketing, midstream and processing, said.

Rummelhoff cited strike threats to liquefied natural gas (LNG) production operated by Woodside Energy and Chevron in Australia, as an example.

These facilities accounted for around 10% of global LNG exports, a relatively small share according to the executive, but still sent prices soaring by 30% in early August.

"It goes to show that the market is still very nervous and small supply disruptions can really cause price spikes," she told an energy conference in Oslo.

She said it was no longer relevant to talk about the European gas market and that the lack of spare supply would continue for years.

"There is no longer such a thing as the European gas market in my mind, as Europe is totally dependent on LNG imports and you really need to look at global energy balances," she said.

The market will remain tight, as demand in Europe and especially Asia will grow in the next two years, while new supply will not enter the market until the end of 2026 and in 2027, Rummelhoff said,

Ahead of winter in the northern hemisphere, Equinor expects European gas storage to be 100% full, up from 94% at present, which should provide a cushion against any supply shocks.

Rummelhoff, however, said every winter was a "reset for the gas market" in that cold weather increases prices and makes refilling gas storages harder. A mild winter has the opposite effect.

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