Norway intervenes to end oil and gas strike citing Ukraine's crisis

London CNN Business Norway has intervened to end a strike by oil and gas workers, citing concerns about Europe's energy crisis due to Russia's war in Ukraine.

Natural gas prices went up after Norwegian oil and gas workers went on strike over a pay dispute Tuesday, shutting three fields in the North Sea and threatening to escalate action over the course of the week.

Norway is Europe's second largest energy supplier after Russia and the strike pushed gas prices to their highest level in four months.

The Norwegian government has proposed a compulsory wage arbitration to settle the dispute.

Labor Minister Marte Mj s Persen called for a meeting late Tuesday after he summoned oil companies and workers to a meeting. My hand was forced to intervene because of the serious consequences of the announced escalations. Norwegian oil and gas employers' lobby said that the strikes could have halted almost 60% of Norwegian gas exports to Europe from July 9.

The closure of the three fields resulted in the loss of about 89,000 barrels of oil a day, according to Norway's state-owned energy company Equinor.

Germany, the region's biggest economy, has already declared a gas crisis and warned that it can't rule out rationing to get through the winter.

The Intercontinental Exchange data shows that the European natural gas futures prices have gone up 5% to 172 euros $177 per megawatt hour because of the strike, according to the data from the Intercontinental Exchange. It is the highest price since March, a result of Russia's invasion of Ukraine.

The Ministry of Foreign Affairs emphasizes that Russia's war against Ukraine has had a major impact on security of supply in many European countries, the Norwegian government said in its statement.

There is an immediate risk of additional energy shortages in Europe. A reduction in Norwegian gas deliveries will worsen the energy crisis, in addition to the political, financial and societal consequences. Norway must do everything in its power to bolster European energy security and European solidarity against Russian aggression. According to an analysis by S&P Global Platts, the gas flows through Nord Stream 1 are only 40% of capacity.

There is an uncertainty that deliveries through the pipeline are due to stop completely for 10 days from the start of next week for maintenance work.

Carsten Fritsch, analyst for energy, agriculture and precious metals at Commerzbank, wrote on Tuesday that the concern is that gas shipments may be even further reduced or not even resumed after the maintenance work.

He said that this would make it virtually impossible to replenish European natural gas stocks for next winter and would necessitate further political measures and cuts to gas consumption.

Gas Infrastructure Europe shows that 59% of the EU's gas storage facilities are full. Fritsch said that is about three percentage points less than usual storage levels for this time of year.

Alex Froley, an analyst at the Independent Commodity Intelligence Services, told CNN Business that the problem facing Europe was the closure of a major liquefied natural gas LNG plant in the United States.

In the summer, gas demand for heating is greatly reduced, and Norway always carries out some maintenance in the summer, so it's not an immediate physical problem for the market to see some reductions, Froley said.

He said that the Freeport LNG plant has been a big source of supply for Europe this year, and isn't expected to return until October at the earliest.