European spot gas prices jump as Libya flows dive

Tue Feb 22, 2011 5:24pm GMT

By Daniel Fineren

LONDON Feb 22 (Reuters) - Spot European gas prices surged on Tuesday as a key pipeline supplying Libyan natural gas to Italy was closed and production in oil and gas fields across the crisis-hit country shut down. Day ahead prices in gas trading hubs from Austria to Britain have risen about 5 percent from Feb. 18, with spot prices jumping to almost 23 euros per megawatt hour on Tuesday as Italy's Eni (ENI.MI: Quote) shut the Greenstream gas link with Libya.

The closure of a key supply route spooked a European gas market already jittery about liquefied natural gas (LNG) tankers freely passing through the Suez Canal. [ID:nWEB0782] [ID:nWEB0737] [ID:nWEB0788]

"There is a direct risk to Italian supply from Libya which has been realised and the indirect risk of contagion which could be yet be realised with fears over the Suez Canal," Nick Campbell, an energy analyst at consultancy Inenco said.

"But perhaps more interesting would be unrest developing in Algeria due to its importance to Spain."

As violence spread across Libya over the weekend, protesters marched in neighbouring North African oil and gas supplier Algeria in the latest in a wave of anti-government protests in the region. [ID:nLDE71I051]

Algeria is a major supplier of gas to Europe through pipelines to Spain and Algerian gas supplies via Italy were cut during violent unrest in transit country Tunisia in January. [ID:nLDE70J1YR] <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Graphic of European spot gas price surge:   Continued...

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