Gas prices in Europe reached $ 2,200 per 1,000 cubic meters
Due to the intensifying energy crisis, Europe is becoming a more attractive market for gas suppliers than Asia. Traditionally, the gas market is referred to as the “Asian premium”, ie situations where the supply of liquefied natural gas (LNG) to China, Japan and other Far Eastern countries is more profitable due to higher prices in the ACR. But now the Asian prize no longer affects spot prices in Europe, as the European prize has been formed, said Deputy Director General of the National Energy Security Fund Alexei Grivach.
According to the Platts Index, on December 20, 1,000 cubic meters. m of gas in the Asian market cost $ 1611. At the same time, spot gas prices in Europe still exceeded the psychologically important threshold of $ 2,000 per 1,000 cubic meters. m, breaking the record of October 6, when quotes came close to this mark. According to the ICE exchange, on December 21 the price of January futures on the Dutch hub TTF rose to $ 2224 per 1,000 cubic meters. m, although then adjusted to a level just below $ 2,200.
Raiffeisenbank analyst Andrei Polishchuk believes that the price rally in Europe was primarily due to record growth in demand for gas, especially in the Asian market. “With the development of LNG, the gas market is becoming more global, suppliers are losing infrastructure constraints, so gas is supplied where prices are higher,” said the expert. He reminded that the rise in gas prices in 2021 began with the Asian market, in particular with China, which, in turn, led to a reorientation of supply from Europe to Asia.
The level of stocks in underground storage facilities (underground storage facilities) in Europe also continues to fall. According to Gas Infrastructure Europe (GIE), on December 19 (latest data) there were 64.5 billion cubic meters in storage. m of gas (filled by 59%). Last year, on the same date, the underground storage facility accumulated 86 billion cubic meters. m.
Spot gas quotes on the TTF have been rallying since mid-December, usually on negative news. Prices push up the uncertainty with the terms of certification of the Nord Stream-2 gas pipeline, the problems in European energy (for example, the day before, prices reacted to the shutdown of one of France’s nuclear power plants). In particular, on December 16, the head of the Federal Network Agency of Germany Jochen Homann said that the issue of certification of the Nord Stream 2 operator Nord Stream 2 AG could not be resolved by mid-2022. Against this background, TTF prices rose by more than $ 120 for 1000 cubic meters. m.
Grivach agrees that the rise in prices in Europe is influenced by objective factors – the weather, the decisions taken by the EU leadership. According to him, the main reason for the record rise in prices is the uncertainty around Nord Stream 2, as well as the lack of long-term contracts, as the EU leadership has pursued a policy of refusing to sign new gas contracts from Russia for the past 10 years.
On Sunday, “Gazprom” booked for the day ahead of the lowest volume of the month pumping gas through the Yamal-Europe gas pipeline, buying in Poland only 3, 8 million cubic meters. m of put up for auction 891 million cubic meters. m, reported “Interfax” with reference to the booking platform GSA Platform. The company also booked in Poland in January 2022 of the proposed 891 million cubic meters. m per day only 1926 million cubic meters. m.
As a result, according to the gas carrier Gascade, on December 21 in Yamal – Europe began reverse supplies from west to east. Dmitry Peskov, a spokesman for Russian President Vladimir Putin, called the situation with the operation of the gas pipeline “absolutely commercial”, ruling out any connection with the start of filling the second line of Nord Stream-2.
As Vygon Consulting’s director of research Maria Belova previously told Vedomosti, the key factor pushing spot prices up is the record shortage of underground storage facilities. All other reasons, according to the expert, only exacerbate the existing deficit, and put additional pressure on the market.
Polishchuk agrees that in conjunction with the record shipment of gas from European underground storage facilities last winter, this led to a record increase in spot prices on European hubs. According to him, if the growth of demand continues, the increase in spot prices will continue in 2022.
Grivach also did not rule out that prolonged cold in the second half of the heating season will heat up the market even more. According to him, the rise in prices to $ 3,000-4,000 per 1,000 cubic meters. m no longer looks unrealistic. He also stressed that Europe in the framework of the “green deal” (European Green Deal, an agreement to radically reduce greenhouse gas emissions in the next 20-30 years. – “Gazette”) has virtually abandoned gas in all possible areas, but demand for it not diminished at all. “Therefore, in the short term, rising prices will no longer affect physical demand,” he concluded.