European gas flows resume after Austria blast rattled market

By Matthias Wabl, Rob Verdonck and Tommaso Ebhardt on 12/13/2017

VIENNA and WARSAW (Bloomberg) -- Natural gas flows resumed overnight in Europe after an explosion at an Austrian hub threatened supplies already pinched by a closed pipeline in the North Sea and a cold snap across the continent.

Oil company OMV AG, which controls the Baumgarten gas hub, managed to divert international transit flows and restored supplies to Italy, Germany and Hungary before midnight, the hub’s managing director said on Wednesday.

“We were able to resume operation for all transit lines before midnight yesterday and all those lines are 100% operational,” Gas Connect Austria GmbH Managing Director Harald Stindl told Austrian public radio ORF in an interview.

UK Natural gas prices extended gains on Wednesday, but traded much lower than Tuesday’s intraday peak when they surged the most in eight years after the explosion. Britain is also struggling to absorb the impact of a crack that shut down a key North Sea pipeline network. Brent crude oil futures rose above $65/bbl

A blast on Tuesday morning at the Baumgarten compressor station, one of the main points where Russian natural gas enters Europe, killed at least one person and injured at least 21 people. That followed two days of snow in London and cooler-than-normal temperatures spreading from the Alps to Scandinavia, which has raised demand for heating fuels.

Baumgarten, about 50 km (31 mi) northeast of Vienna, transports the equivalent of a 10th of Europe’s gas demand. The company and Austrian police will further analyze the exact circumstances of the blast, which may be linked to a newly installed filtering system at the hub, Stindl said.

UK next-month gas futures rose 0.4% to 66.6 pence per therm ($8.8/MMBtu) as of 7:36 a.m. on ICE Futures Europe in London.

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