On Wednesday (August 9), local time, European natural gas prices rose by as much as 40%, the largest increase since March 2022, due to possible strikes at some Australian plants and increased risks of liquefied natural gas (LNG) supply shortages.
As of press time, the gains in Dutch natural gas futures fell back to 22%.
Workers at Chevron and Woodside Energy Group's Australian plants have voted to go on strike, which could hit Australian LNG exports and intensify the global scramble for LNG. Australia is the world's largest exporter of LNG.
After the conflict between Russia and Ukraine broke out in February last year, Europe has significantly reduced its dependence on Russian natural gas and turned to import large quantities of LNG. Data show that in 2022, the EU's LNG imports reached 101 million tons, an increase of 58% over 2021, which also made the EU the world's largest LNG buyer last year.
Nick Campbell, director of consultancy Inspired Plc, said Asian buyers could increase LNG imports from other regions if supplies were disrupted, which would affect Europe.
"LNG has become a baseload supply in the European gas supply mix, so any indication that there is a risk to that flow will keep prices underpinned," Campbell said.
Natural gas prices were already under pressure after seasonal maintenance at some plants in Norway, Europe's largest natural gas supplier, took longer than expected.
German energy giant E.ON has previously warned that gas prices could rise this winter.
As time enters August, the EU's task of storing natural gas becomes more urgent. In June last year, the EU approved a regulation requiring member states to have natural gas stocks reach at least 80% of their gas storage capacity by November 2022 and 90% by November this year, and natural gas can be shared among member states.
According to data from the GIE, as of August 7 local time, the utilization rate of natural gas storage facilities in EU countries was 87%.
