EUROPE GAS-Prices rise as Australian LNG outage fuels supply concerns

EUROPE GAS-Prices rise as Australian LNG outage fuels supply concerns

LONDON, Aug 27 (Reuters) – Dutch and British wholesale gas prices rose on Tuesday afternoon on supply concerns raised by an extended outage at an Australian LNG plant and geopolitical risk, though strong storage inventories are limiting the upside.

The benchmark front-month contract at the Dutch TTF hub was up 1.53 euros at 38.08 euros per megawatt hour (MWh), or 12.50 $/mmBtu, by 1155 GMT, LSEG data showed.

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In the British market, the front-month contract was up 3.77 pence at 92.49 pence per therm.

Train 2 at Ichthys LNG is scheduled to be restarted in October, operator Inpex Corp said on Tuesday. The production train at the plant in Darwin, Australia, was halted on Aug. 20 and is its second train outage in the past month.

“The extension of the Ichthys LNG outage in Australia shall cause stronger competition for spot LNG among Asian buyers to meet increased cooling demand,” said Brainchild Commodity Intelligence analyst Klaas Dozeman.

“Also, the (recent) rise in oil prices makes spot LNG attractive again compared to long-term LNG contracts that are priced against oil.”

Prices of European gas always track Asian LNG prices higher owing to the competition between Europe and Asia for LNG.

The market continues to closely monitor Gaza peace talks and the Ukraine-Russian conflict.

“Escalations continued to rumble both in the Middle East and on the Ukraine-Russia border in recent days, which will continue to inject some nervousness into energy markets,” consultancy Auxilione said in a morning note.

The near-term risk of wider conflict in the Middle East has eased somewhat after Israel and Lebanon’s Hezbollah exchanged fire without further escalation, but Iran still poses a significant danger as it considers a strike on Israel, America’s top general said on Monday.

Russia launched several waves of missile and drone attacks targeting scores of Ukrainian regions and killing at least four people, Ukraine’s military said early on Tuesday, a day after Moscow’s biggest air attack of the war on its neighbour.

European gas storage levels have reached 91.6% of capacity, having hit a Nov. 1 target two months early, Gas Infrastructure Europe data showed.

Russian gas producer Gazprom said it would send 42.4 million cubic metres (mcm) of gas to Europe via Ukraine on Tuesday, compared with 42.1 mcm on Monday.

In the European carbon market, the benchmark contract rose 0.96 euros to 71.45 euros a metric ton.

($1 = 0.8951 euros)

(Reporting by Marwa RashadEditing by Susan Fenton and David Goodman)