Statkraft CEO: Iran crisis could cause European power prices to rise and industry woes

The prolonged Iran crisis, which has hampered shipments of key energy and halted the production of?Qatari gas in Qatar, is expected to increase European electricity prices and erode industrial competitiveness. This was stated by Statkraft's CEO on Thursday.

The United States, Israel and Iran have all launched attacks on Iran. In addition, Iran has also struck at its Arab Gulf neighbours. This has paralysed shipping through the Strait of Hormuz.

Qatar's LNG production, which accounts 20% of the global LNG supply, has been forced to shut down due to the crisis.

Statkraft's CEO Birgitte Vartdal said that the conflict is a humanitarian and geopolitical crisis, but it has broader ramifications.

Vartdal noted that the price of electricity is often determined by gas-fired power plants.

Statkraft, Europe's largest renewable energy producer and owner of four gas-fired power plants in Germany.

She added that the German, French and British energy markets were particularly exposed to the risks of a 50% increase in the price of?gas since the beginning the conflict on 28 February.

The benchmark German power price for Europe has increased by around?9% in the same time period.

Vartdal warned that a persistently higher price would be a "challenge" for the industrial sector.

Vartdal stated that "we are in a time where the gas storage capacity in Europe is low. At the same time, we have thankfully gotten through the worst part of the winter and are therefore not concerned about the physical condition in the coming months."

She added that a 'combination' of a weak hydrological balance in southern Norway due to a?lack of snow, which could feed hydropower production in the future, and any long-term impacts of gas market tightness, could also affect prices in Norway. (Reporting and editing by Bernadette baum)

(source: Reuters)