Austrian gas plant back online after blast but outlook for consumers remains chilly
Supplies to markets restored, but accident lays bare economic and political rivalries in energy sector
Supplies of natural gas to Europe through Austria resumed yesterday, a day after an explosion killed one person at a terminal that supplies some of the continent’s major consumers.
OMV, the company that controls the facility at Baumgarten in Lower Austria, said that supplies to Germany, Hungary and Italy were restored before midnight on Tuesday.
Italy remains in a state of emergency called by the country’s economic ministry.
“We were able to resume operation for all transit lines before midnight yesterday and all those lines are 100 percent operational,” a spokesman for Gas Connect Austria (GCA), the hub’s operator, told Austrian radio.
The cause of the explosion is believed to have been a technical fault in a filtration system, according to GCA. Work had been carried out on the system on Monday, and staff from TUV Austria, a licensing authority, were on site on Tuesday morning to certify that it was safe.
It was also confirmed that it was a TUV employee who died in the blast at the facility, which transports a 10th of Europe’s gas demand.
Despite the rapid restoration of gas flows through Baumgarten, the repercussions of the incident continue to be felt across the continent, both economically and politically.
As the largest supplier of natural gas to Europe, with a third of the country’s output flowing through Baumgarten, Russia highlighted why its plan for a pipeline known as Nord Stream 2, to be built across the Baltic Sea, is urgently required.
“Of course, this accident shows how important sustainable supplies of natural gas and energy resources [are] to Europe and how acute is the issue of sustainability of the whole [energy] system functioning,” Kremlin spokesman Dmitry Peskov said.
Gazprom, the Russian energy group, redirected its gas flows through Europe on Tuesday. It wants to build a US$10 billion (Dh36.72bn) pipeline that will allow it to send gas to Germany from the north, bypassing land routes over Ukraine, Poland and Belarus.
Nord Stream 2 will double the natural gas export capacity of Russia.
Despite German support, the European Union believes the plan would undermine efforts to reduce its dependence on energy from Russia.
This position was endorsed on Tuesday by A Wess Mitchell, US assistant secretary of state for European and Eurasian affairs in Washington, who said that “on energy security, Germany gets it wrong”, referring to the country’s support for Nord Stream 2. “And it gets it wrong in a way that hurts other EU member states.”
Implications of the accident are also being felt in other countries.
Italy will soon be linked by the Trans Adriatic Pipeline to the gas fields of Azerbaijan, a project that is 50 per cent completed and expected to go on line in the next few years.
In the United Kingdom, Tuesday’s sharp rise in gas prices continued to be felt.
There the situation is compounded by a cold start to winter and problems with a key pipeline network linking the country to the Forties oil field, the largest in the North Sea.
The Forties carries fourtenths of the crude oil extracted from the North Sea, and its closure for up to three weeks to mend a hairline crack in the pipeline means 80 oil platforms will sit idle.
Massimo Di-Odoardo, an analyst at energy consultancy Wood Mackenzie, said: “The European gas market seems to be going through a perfect storm.
“The Forties outage will take out more than more than 10 per cent of UK gas demand. The explosion at Baumgarten … halted Russian imports to Italy, representing more than 30 per cent of Italian gas demand.
“There is still plenty of storage across Europe to cope with this. But if supply does not resume soon and the cold weather continues, prices will remain strong through the winter.
“We might well see some competition between Europe and Asia to attract liquefied natural gas this winter,” Mr Di-Odoardo said.