Italy to declare energy emergency after Austrian explosion cuts off gas supply

Italy to declare energy emergency after Austrian explosion cuts off gas supply

The explosion at the gas facility in Baumgarten, near Austria's border with Slovakia, killed one person and injured 18. Police and Gas Connect Austria said they believed a technical fault was to blame.

News of the blast at Baumgarten, which has a transport capacity of 40 billion cubic metres (bcm) a year, sent gas prices in Europe soaring on fears it would restrict supply as winter sets in, with Italy declaring a state of emergency.

Natural gas and power prices jumped in Europe, and Brent crude oil futures rose above $65 a barrel for the first time since June 2015, extending its premium over the US benchmark.

The terminal's operator, Gas Connect Austria, said it had closed the facility and suspended the transit of natural gas through Austria to southern Europe.

FT reports that "in Italy, day-ahead gas prices nearly doubled, while Dutch prices also rose sharply". Those pipelines supply Hungary, Slovenia and Croatia but also Baumgarten's biggest recipient, Italy. The pipeline remains temporarily shut down having sustained "major" material damage, according to Gas Connect spokesman Armin Teichert.

The Italian wholesale day-ahead price surged 215 percent to 75 euros per megawatt-hour, its highest recorded level.

Massimo Di-Odoardo, an analyst at Wood Mackenzie, said Europe has enough natural gas in storage to cover its immediate needs.

The gas hub has been shutdown while safety checks are carried out to bring the situation under control.

Russia's Gazprom says it is aware of the incident and is "currently working on the redistribution of gas flows" to ensure customers remain unaffected, Ria Novosti reported.