Gas price futures hit a fresh record Tuesday of €234.50 per megawatt-hour as Europe braces for a possible Russian gas shutoff and countries race to fill underground gas storage facilities before winter.
The price a year ago was €28.80 per MWh.
Gazprom, the Russian gas export monopoly, warned on Tuesday that "according to conservative estimates," prices could jump a further 60 percent from current levels by winter.
The European Commission wants the bloc to end its reliance on Russian gas as fast as possible following Moscow's invasion of Ukraine six months ago.
Russia is already dropping in the ranks of EU gas suppliers — losing its No. 1 spot in the German market to Norway, according to data released Monday. Historically, Norway supplied about a fifth of Germany's natural gas imports, but this year it's closer to closer to 30 percent, the newspaper Zeit reported.
But Oslo's rise in the rankings has more to do with Moscow slashing deliveries than any major boost in Norwegian exports — and Norway's prime minister made it clear that without new gas projects, additional increases won't happen.
Last month, Norway exported 10.2 billion cubic meters of gas globally, only about 6 percent more than in July of last year.
Despite that negligible increase, Norway's gas export revenues came to €13 billion in July, four times more than for the same month last year.
Those eye-watering prices are expected to last, as scorching heat drives up electricity demand to power air conditioners at the same time that electricity generated by wind, hydro and nuclear is slumping, which is prompting utilities to turn to gas-fired power.
It's also making it expensive for utilities to fill underground gas storage — something usually done in the summer when prices are normally cheaper. Despite those problems, Germany is ahead of schedule, and has filled its gas storage to 77 percent; Berlin has a target of 95 percent by November 1.
With Russia seen as an unreliable supplier, EU countries are hoping to get more gas from Norway.
At a Monday press conference with German Chancellor Olaf Scholz, Norwegian Prime Minister Jonas Gahr Støre said his country's energy sector was prioritizing sending as much extra gas as possible to Europe to blunt the blow of Russian shutoffs, rather than injecting the gas into fields to boost oil production.
Berlin, he added, is the biggest beneficiary.
"Germany is Norway’s most important partner in Europe ... Norway delivers as much gas as possible to Germany," Støre said, after a meeting with Scholz on energy security and the war in Ukraine. "Norway and Germany have enjoyed wide-ranging cooperation on energy for many years. We are now expanding this."
Following Russia's invasion of Ukraine, Norway's energy ministry approved production license increases on several major gas fields, but warned the amounts were close to the ceiling of how much could be extracted.
"We have been increasing our gas exports compared to what we had at the outset by close to 10 percent, which is really maximum, so we will do whatever we can with the companies to maintain a high level," Støre said Monday. But "we can't just decide politically that we're going to produce more."
Scholz tweeted after the summit: "Norway has expanded its gas production for us. This helps to get through the winter now and fill our gas storage again next year."
Last year, Norway supplied about a quarter of the EU's gas imports, while Russia accounted for 39 percent. But Gazprom has curtailed or halted deliveries to a dozen EU countries, including Germany.
Preliminary Gazprom data from the beginning of the year to August 15 shows exports to countries beyond the ex-Soviet Commonwealth of Independent States are down about 36 percent compared to last year. That figure takes into account higher deliveries to China, meaning the real reduction to Europe is more severe.
On Tuesday, German energy companies also signed a memorandum of understanding with the government to keep two floating liquefied natural gas terminals fully supplied until March 2024. The two plants will supply about a fifth of German demand when they go online at the end of the year.
It's part of a broader effort to wean Germany off its reliance on Russian gas, but there is "no guaranteed scenario for next winter," Vice Chancellor Robert Habeck said after signing the deal with the four utilities. Habeck added: "The situation, the challenge, is far too dynamic for that."
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