Even that: strike on Norway's natural gas fields

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Because of the loss of supplies from Russia, Norway had stepped into the breach with its energy production. Now the gas fields are on strike – with uncertain consequences.

Norwegian gas platform in the North Sea

In Norway, strikes by oil and gas workers have begun. As a result, three gas fields failed as a result of the industrial dispute on Tuesday. Because from midnight the Lederne trade union went on strike on gas production in the Gudrun, Oseberg Süd and Oseberg Ost fields.

The strike comes at a bad time for Germany and the other EU countries. The supply situation is strained anyway due to the cessation of Russian oil imports and the throttling of the gas flow from Russia to Europe. And the situation could get even worse because Norwegian workers want to extend their strikes to three or four other production sites.

Is the government in Oslo going to intervene?

The extent to which the Norwegian government will allow these strikes to run unhindered is an open question. In any case, the Ministry of Labor has already announced that it intends to follow the conflict “closely”. In the case of “extraordinary circumstances” the Ministry can intervene and end such strikes. According to calculations by the Reuters news agency, up to a quarter of Norwegian gas production could be shut down in the coming days as a result of the work stoppages, and around 15 percent of oil production could also be affected.

However, most observers do not yet see an acute threat to the gas supply in Germany. After all, the gas storage tanks are currently a good 60 percent full. Gas is also still flowing through the Nord Stream 1 pipeline from Russia to Germany. However, the amount is already severely restricted, it is only around 40 percent compared to the possible full capacity. The background is that Russia, in response to the Western sanctions, has taken pressure off the pipeline and is threatening to stop gas deliveries. 

Norwegian oil tanker, here off Tromsö in the north of the country

Maintenance work and state aid

In this context, one date comes into focus – July 11th. Because then the annual maintenance work on the pipeline is due. Speculation that gas could no longer flow from Russia after the pending maintenance of the pipeline has been causing the gas price to rise for days. The European natural gas future continued to rise on Tuesday and rose by more than five percent to 155 euros per megawatt hour. That is as high as it was three months ago. Meanwhile, the share of the largest German gas importer Uniper continued to come under pressure at the beginning of the week. The background is the negotiations on state aid for the ailing group.

As an importer, Uniper now has to buy gas at high prices on the world market due to the shortage. As is common practice in the energy sector, the company has long-term supply contracts with its customers. These are smaller energy suppliers such as municipal utilities, which in turn supply industrial customers and consumers with gas and energy. Since prices are fixed in the contracts, importers like Uniper have so far not been able to pass on the increased procurement costs. Specific figures are not yet known. However, some experts estimate the losses incurred by Uniper at around 900 million euros – per month.

The problems not getting any smaller: Economics Minister Robert Habeck

Federal government wants to adjust laws

For this reason, the federal government is now working flat out to introduce changes to the law before the summer break in order to be able to help such companies and spread the costs incurred over as many shoulders as possible. On Tuesday, for example, the federal cabinet decided on changes to the Energy Security Act and intends to ensure the gas supply in the event of a worsening market situation. “The situation on the gas market is tense and unfortunately we cannot rule out a deterioration in the situation,” said Economics Minister Robert Habeck (Greens). It is now a matter of doing everything to “maintain the basic supply in winter and keep the energy markets running as long as possible”. 

On the one hand, a protective shield is planned for energy companies that are assigned to the critical infrastructure – stabilization measures are to be simplified up to and including the state. The model for this is the help for companies like Lufthansa in the middle of the corona pandemic. Secondly, it should be possible for energy suppliers along the supply chain who are affected by high prices to pass on the high prices. There is already such a price mechanism in the Energy Security Act, now there should also be a levy mechanism in which the additional costs for the procurement of replacement gas are distributed to all gas customers via a levy.

Because municipal utilities also quickly reach their limits would if the importers simply passed the rising procurement costs on to them, a pay-as-you-go system is under discussion.  “A levy would have the opportunity to pass on the costs in a halfway solidary form,” said the general manager of the Federal Association of Energy and Water Management (BDEW), Kerstin Andreae on Deutschlandfunk. A balance could be found between the gas suppliers themselves, the suppliers such as public utilities and their customers – i.e. companies and consumers.