The Norwegian government has stepped in to end a strike that had threatened supplies of gas to Britain.
The labour dispute had shut down oil and gasfields and was expected to cut Norway’s gas supplies by almost 60% by the weekend.
Gassco, Oslo’s state-owned pipeline operator, had warned that “in a worst-case scenario, deliveries to the UK could stop totally”.
Workers demanded a pay increase to handle rising inflation, which has been triggered in part by a jump in oil and gas prices since Russia’s invasion of Ukraine.
However, the Norwegian government has the power to intervene to end industrial disputes. The country’s labour minister, Marte Mjøs Persen, said: “When the conflict can have such great social consequences for the whole of Europe, I have no choice but to intervene in the conflict.”
Gas prices had soared in recent days as the strike action threatened to exacerbate the existing supply crunch, but their rally was halted on Wednesday after the announcement.
However, this respite from rising gas prices may be short lived, with the Nord Stream 1 gas pipeline from Russia to Germany scheduled for maintenance from 11-21 July.
Goldman Sachs said it did not believe that flows through Nord Stream 1 would be completely restored after the work was completed.
The investment bank raised its forecasts for European natural gas prices to average €153 per MW hour in the third quarter of 2022, €121 in the fourth quarter and €138 next summer. The Dutch wholesale gas contract for September delivery dropped 7.5% to €161 per MW hour on Wednesday.
European countries have been scrambling to fill their gas storage sites before the winter for fear that Russia will cut off supplies altogether.
Britain sources about a third of its gas from Norway and the remainder from a combination of the North Sea, other parts of Europe and imports of liquefied natural gas from the rest of the world, including the US.
Germany is far more reliant on Russian gas and fears are growing over the knock-on effect of Russia reducing gas supplies.
The Deutsche Bank analyst Jim Reid said: “Economy minister [Robert] Habeck has talked about gas as potentially being a Lehman Brothers moment, so the stakes are high. Indeed, this is a heavy cloud hanging over European assets at the moment.”
Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said Britain could cope without Russian gas. He said: “The small hole that will be left by Russian imports falling to zero by the end of this year – as the UK government has pledged – should be covered easily by a pickup in liquefied natural gas imports from the US and Qatar.”
Separately on Wednesday, a Russian court told the Caspian Pipeline Consortium, which transfers oil from Kazakhstan to the Black Sea, to halt its activities for 30 days. The pipeline is one of the largest in the world and exports about 1.2m barrels a day. Despite the court order, exports are still flowing, Reuters reported.
