Gas prices in Europe rose 12.5 percent during the day due to the halt of production in the Tamar gas field after the conflict between Israel and Palestine and the closure of the Balticconnector pipeline between Finland and Estonia due to an unusual pressure drop. At TTF, the Netherlands-based virtual natural gas trading point with the greatest depth in Europe, the price of natural gas, which closed at 43.9 euros per megawatt-hour in November futures contracts, opened at 44.6 euros per megawatt-hour today. Prices rose to 49.7 euros during the day. Prices closed the day at 49.4 euros, with a 12.5 percent increase compared to yesterday’s closing. Thus, gas prices in Europe rose to the highest level seen since August 28.
Following the conflict between Israel and Palestine, prices rose rapidly yesterday after Israel demanded that the US energy company Chevron stop production in the Tamar gas field in the Eastern Mediterranean. Gas prices continued to climb in Europe as conflicts in the region expanded and uncertainties regarding supply security increased. The closure of valves due to an unusual pressure drop detected in the Balticconnector pipeline, which provides natural gas flow between Finland and Estonia, also fueled supply security concerns.
Tamar Gas Field And Its Impact On Prices In Europe
Natural gas production in the Tamar field increased by 18 percent last year compared to 2021, reaching 10.2 billion cubic meters. The field meets 70 percent of Israel’s natural gas needs for electricity production. Additionally, some of the gas produced from the field is exported to Egypt, which converts this gas into liquefied natural gas (LNG) and exports it to Europe. It is estimated that Egypt’s gas imports from Israel decreased by 20 percent after production in the Tamar gas field stopped.
LNG trade between Egypt and Europe increased after Europe accelerated LNG purchases to fill the gap caused by Russian gas. While Europe’s rapidly rising LNG imports filled the gap of Russian gas, it caused the continent to become vulnerable to developments in the global gas market and increased volatility in prices.