Gazprom predicts gas prices in the EU to rise above $4,000 per 1,000 cubic meters. m

Spot gas prices in Europe, according to Gazprom’s conservative estimates, in the winter of 2022-2023. may exceed $4,000 per 1,000 cubic meters. m. The company announced this on 16 August.

“Gazprom” also disclosed operating data, according to which the export of the monopoly to non-CIS countries from January 1 to August 15, 2022 amounted to 78.5 billion cubic meters. m – 36.2% (or 44.6 billion cubic meters) less than in the same period in 2021.

As of August 16, the application for transit through Ukraine amounted to 42.2 million cubic meters. m of gas (with a contractual 109.6 million cubic meters per day), it is kept at the level of 41–42 million cubic meters. m from the end of May. According to the Nord Stream gas pipeline, according to the data of its operator and the calculations of Vedomosti, on August 15, about 33.2 million cubic meters were pumped to the EU. m of Russian gas. According to Turkish Stream on this day, according to Vedomosti calculations based on data from the European Network of Gas Transportation System Operators (ENTSOG), “Gazprom” delivered to Europe about 45 million cubic meters. m. Thus, on August 15, about 120 million cubic meters were exported to the EU. m of fuel from Russia. For comparison: on August 15, 2021, Gazprom supplied 385.9 million cubic meters to the EU. m of gas.

Against the backdrop of reduced exports from the Russian Federation, extremely high spot gas prices persist in Europe. According to the ICE exchange, at the TTF hub in the Netherlands on August 16, September futures crossed the bar of $ 2,500 per 1,000 cubic meters. m. At the same time, prices in Europe continue to be higher than in Asia. According to the JKM Platts index and Vedomosti’s calculations, as of August 15, the “European premium” was about $700 per 1,000 cubic meters. m, on average in July-August it was at the level of $500.

According to Gas Infrastructure Europe (GIE) data as of August 14 (latest updated data), the storage facilities were almost 75% full, with about 80.6 billion cubic meters. m. According to the requirements of the European Commission (EC), by November 1, 2022, storage facilities in the EU must be at least 80% full. Thus, the EU countries need to store approximately 6.5 billion cubic meters more. m of gas. According to GIE, net injection on August 14 was about 400 million cubic meters. m per day – only slightly lower than at the end of May. If such pace continues until November 1, the EU will be able to complete the task.

Now in Europe, spot prices are growing faster than in Asia, which is explained by a decrease in supplies from Russia and the abnormal heat that has been established on the European continent, said Maria Belova, Research Director at Vygon Consulting. But in September-October, according to her, the competition between these markets for free volumes of gas will intensify.

In her opinion, against the backdrop of a cold snap in Asia in autumn, the “European premium” may again be replaced by an Asian one. At the same time, Belova recalled that gas had already been traded in Europe at $4,000 per 1,000 cubic meters. m: prices rose to this level on March 7, after the start of a special military operation in Ukraine due to market fears that free gas volumes would decrease. “Now these fears are justified,” Belova believes.

The expert also noted that even the average filling of UGS facilities by 80% by Europe by November 1 “does not guarantee the energy security” of all EU countries, since the situation with reserves will differ in each specific country. “Against the backdrop of record high prices and lack of volume on the free market, this could be a serious test of European solidarity,” Belova added.

According to Anton Usov, managing partner of Kept, UGS facilities in Europe will be filled at any gas price, but the further premium of the European market will depend on the volume of gas imports coming from the Russian Federation.

Senior analyst Alfa Bank Nikita Blokhin believes that the scenario of 2021 may repeat itself in winter, when the rush demand for gas in December led to an uncontrolled rise in prices on the European gas market. However, this year the period of record price growth may be delayed, and the quotes themselves may reach a maximum for the entire period of monitoring the European market, the expert believes.

At the same time, Blokhin added that price growth in Europe will continue as competition with key gas consumers in Asia intensifies. As the analyst noted, the December futures for the JKM Platts index, which reflects the market value of LNG in the Asia-Pacific region, already now exceeds $2,150 per 1,000 cubic meters. m., while European contracts for delivery in the IV quarter of 2022 are traded on the TTF below $ 2,500 per 1,000 cubic meters. m.

Blokhin doubts that the implementation of the EU plans to fill European UGS facilities by 80% by November 1, 2022 will lead to a significant reduction in quotations. According to the expert, even if most EU countries manage to comply with the EC resolution by the beginning of the 2022-2023 heating season, competition between the European and Asian markets will only intensify, which will further warm up prices.