U.K. natural gas prices jumped the most in more than eight years after an explosion at one of Europe’s biggest supply hubs threatened to curb flows during a cold snap. The market already was struggling to absorb the impact of a crack that shut down a North Sea pipeline network when a blast at the Baumgarten hub in Austria killed at least one person and injured 18. The facility 50 kilometers (31 miles) northeast of Vienna transports the equivalent of about a 10th of European gas demand.
Front-month gas in Britain jumped as much as 23 percent to almost 74 pence a therm ($9.82 a million British thermal units) on ICE Futures Europe, the highest since December 2013. Gas flows into the U.K. surged to a four-year high overnight as shippers responded to higher prices. Liquefied natural gas tankers may be able to fill some of the gap, but those vessels take days or even weeks to arrive, said Massimo Di-Odoardo, principal analyst of gas & LNG at Wood Mackenzie Ltd.
“Gas demand is at above average levels because of the cold snap,” he said by email, estimating the shortfall of supply from the Forties outage at about 10 percent of average winter demand. “If outages persist, prices will remain high for some time.”
Supplies from the Netherlands, Belgium and storage sites increased after a worsening hairline crack halted North Sea production from fields that use the Forties pipeline network. That boosted prices on Monday.
Compounding supply problems, the Norwegian network manager said Tuesday flows would be trimmed from Troll, Europe’s largest offshore gas field. Norway is the U.K.’s biggest foreign supplier. Supply from Belgium and the Netherlands also dipped from near-record levels after the explosion in Austria.