Europe’s Gas Crisis Deepens

July 5, 2022

Graph from Financial Times, July 5 2022

“Reliable” natural gas is not that reliable if it is held hostage by global events beyond the consumer’s control.
Russia’s war on Ukraine has been a clear demonstration that Europe, and the world, need to speed the transition away from fossil fuels.

See below: workers in Norwegian oil fields went on strike this week, spiking prices yet again and threatening a shut down of gas production from a critical source. The Norwegian government triggered emergency powers and stepped in to block the strike – for now.

Reuters:

Oil and gas from Norway, Europe’s second-largest energy supplier after Russia, is in high demand as the country is seen as a reliable and predictable supplier, especially with Russia’s Nord Stream 1 gas pipeline due to shut for maintenance from July 11 for 10 days.

The British wholesale gas price for day-ahead delivery leapt nearly 16%, though the price of Brent crude fell as fears of a global recession outweighed concerns about supply disruption, including the strike in Norway.

“The strike has begun,” Audun Ingvartsen, the leader of the Lederne trade union said in an interview, adding the union would escalate the strike to pressure employers to address demands for wage increases to compensate for rising inflation.

Members of the union are senior staff members, considered crucial to operations, and among the best-paid employees working offshore.

In a worst case scenario, Belgium and Britain would not receive any piped Norwegian gas from Saturday, gas pipeline operator Gassco said, because of the risk of a shutdown at Sleipner, a gas transportation hub in the North Sea.

“If the conflict, in the worst case, also results in that the Sleipner Riser has to shut down for safety, then we will have zero deliveries towards Easington (in Britain) and towards Zeebrugge (in Belgium),” Alfred Hansen, Gassco’s director of system operations, said.

The government can intervene to stop any strike in exceptional circumstances.

Such powers have previously been used to end petroleum sector strikes to protect Norway’s reputation as a reliable gas supplier to Europe. The last time such an intervention took place was in 2020.

The Norwegian Labour Ministry told Reuters on Tuesday it had no comment on the ongoing conflict.

“In accordance with how wage disputes are resolved in Norway, it is the social partners’ responsibility to find a solution to any conflict,” Deputy Labour Minister Maria Schumacher Walberg said in a statement to Reuters. read more 

Union leader Ingvartsen said the escalation was not designed to pressure the government to intervene and impose a settlement, adding that he had not been in touch with the government.

“Our goal is that employers engage with us and listen to their employees,” he said.

Deutsche Welle:

Norway’s government imposed a forced settlement in a dispute between striking offshore oil and gas workers and energy executives on Tuesday.

The move has put a stop to the strike, also easing fears that further strikes could have significantly reduced the Scandinavian country’s gas output and lead to shortages in Europe.

The Norwegian Labor Ministry moved to step in on Tuesday evening to halt the dispute, Norwegian broadcaster NRK reported.

The country’s government can step in and stop strikes in extraordinary circumstances.

Audun Ingvartsen, the leader of the Lederne trade union told Reuters that the strike had ended.

“Workers are going back to work as soon as possible,” he told the news agency.

Members of Lederne had demanded wage raises commensurate with rising inflation. 

Equinor, Norway’s largest gas producer and the second largest in Europe, initiated a safe shutdown of three oil fields due to the strike, the operator confirmed on Tuesday.

Another 117 employees were set to go on strike in three other oil fields on Wednesday if labor negotiations had not started.

.

Deutsche Welle:

Just after a midnight deadline that could have seen a complete shutdown of oil and gas production, Norwegian Labor Minister Hanne Bjurstroem said that the government had been forced to intervene.

“I had to make this decision to protect Norway’s vital interests. It wasn’t an easy choice, but I had to do it,” Bjurstroem told Reuters after a last-ditch meeting with trade unions and the Norwegian oil industry association (OLF).

Norwegian law allows the government to force striking workers back to duty, if it believes there is a threat to safety or the national interest, and it has used these powers in the past. However, until the threat of a total shutdown loomed imminently, the Labor-led coalition had been reticent to do so.

Leif Sande, leader of the largest labor union Industri Energi, said the workers would return to work immediately. “It’s very sad. The strike is over,” he told journalists. The dispute is now set to go into a process of arbitration.

Related story:
I was traveling thru Copenhagen last night enroute to Greenland, as another strike cancelled flights at the Scandinavian airline, SAS. Chaos at Kastrup, Copenhagen’s air hub. Workers frustrated with, among other things, inflation due to rising fossil fuel prices.

New York Times:

SAS, which is the national airline of Denmark, Norway and Sweden, said it would continue flying, although on Monday it called the pilots’ strike “devastating” and warned that it could cause the cancellation of half its flights, affecting about 30,000 passengers daily.

On Monday, SAS canceled 51 percent of its flights, according to FlightAware. By midday on Tuesday, nearly 80 percent of its flights had been canceled. SAS’s stock price fell about 15 percent Tuesday, extending a 5 percent decline the day before.

“The ongoing strike has made an already challenging situation even tougher,” Anko van der Werff, the airline’s chief executive, said in a statement on Tuesday.

SAS’s troubles come in a summer riddled with problems for the air travel industry, caused by staffing shortages and walkouts by employees unhappy with long hours and low pay that has failed to keep up with soaring inflation. Airports across Europe have been scenes of long lines of unhappy passengers, eager to travel after years of pandemic lockdowns.

Advertisement

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: