Local market still unaffected by Austria gas hub explosion

Greece’s energy market has remained unaffected, without any danger of supply shortages and increased prices, for the time being, following yesterday’s blast at Austria’s Baumgarten gas hub, which killed one person and injured at least 18, according to police reports.

The blast at Baumgarten, one of Europe’s main distribution hubs, prompted a 23 percent increase in wholesale natural gas prices within minutes of the explosion to reach a four-year high, but the effects have not reached as far as Greece.

This may be explained by the fact that Greece’s natural gas market does not feature many buyers and sellers, nor does it serve as a gas hub, but, instead, is supplied directly via a route stretching from Ukraine all the way to the Greek-Bulgarian border.

However, it is still too early to rule out any impact on the small Greek market over the next few days, especially if repair work at the damaged Austrian facility is delayed and European gas demand levels remain high as a result of the winter conditions.

Market officials noted LNG prices may rise if the damage at Baumgarten proves extensive. No further affects are anticipated for the time being, according to authorities.

Besides the lignite-fired power stations currently on hand in Greece – four of five units at the main power utility PPC’s Agios Dimitrios facility, as well as the utility’s Megalopoli III and IV and Amynteo II – the country’s grid is also being supported by gas-fueled facilities in Aliveri, Lavrio, Megalopoli V, a Heron facility, Elpedison’s unit in Thisvi, as well as units operated by Protergia and Korinthos Power.

To date, no gas import shortages, or exports, to cover increased needs in central Europe, have been registered.

Austria’s Baumgarten facility, on the Slovakian border, supplies one tenth of total European demand and is a key distribution center for gas hailing from Russia and Norway.

A Bloomberg report described the incident as a warning that highlights the age-factor of much of Europe’s key energy infrastructure.

Just hours prior to the explosion in Austria, an underwater pipeline connection transfering natural gas from the North Sea to northern Europe needed to be temporaily closed after a minor rupture was detected. Also, gas storage facilities in the UK are frequently forced to shut down as a result of ageing pipelines.

The majority of Europe’s natural gas infrastructure was developed between 1960 and 1980, during a period when the former Soviet Union was exploiting new Siberian deposits for increased gas exports to west Europe.

Ageing gas infrastructure requires increased attention and maintenance over time. Increased demand also accelerates deterioration.

Lower natural gas and oil prices have prevented any talk of replacing some of Europe’s ageing energy installations.

The UK has been impacted most, in terms of prices, by the Baumgarten gas hub explosion, which coincided with increased demand from northern Italy to Scandinavia as a result of the drop in temperatures.