Statkraft CEO sees risk of prolonged higher power prices

By Nora Buli

OSLO, July 21 (Reuters) - The war in the Middle East combined with low storage levels for both natural gas and in Nordic hydropower reservoirs could see European electricity prices stay elevated for longer, the CEO of Norwegian utility Statkraft said on Tuesday.

Earlier, the state-owned company, one of Europe's largest renewable energy producers, reported a rise in earnings on the back of higher power prices both in the Nordics and in Germany.

The flare-up of tensions in the Gulf meant uncertainty in the global energy market has increased with gas prices back at levels seen at the start of the U.S. war with Iran, Birgitte Ringstad Vartdal told reporters when presenting the earnings.

"We see higher prices and a risk of higher prices also in the future," she said, adding that this could hurt the long-term competitiveness of European industry.

Vartdal declined to predict specific levels for power prices going forward.

In the wholesale market, Nordic power for the fourth quarter was last trading at €86 per megawatt hour (MWh), while the German equivalent traded at €140.75/MWh, according to LSEG data.

Vartdal said that in Norway, little snow during the winter season had led to a tighter hydrological balance, which tracks available resources for hydroelectric power generation, the cornerstone of domestic electricity generation.

Especially southern Norway, which hosts the largest resources while subsea power cables link it to the continental European market, was at a hydrological deficit, she added.

"We are not very worried where we are now. There is still a good chance of a lot of rain throughout the autumn, but it is clear that it is important to monitor the situation," she said.

(Reporting by Nora Buli, editing by Terje Solsvik)