Page 12 - EurOil Week 10 2022

EurOil PERFORMANCE EurOil

European gas prices hit unprecedented

high amid ongoing Ukrainian conflict

EUROPE THE front-month gas price at the Dutch TTF time being, supplies are actually higher than
hub spiked at close to $4,000 per 1,000 cubic they were in February. Meanwhile, temperatures
Moscow's actions metres on March 7, amid the escalating conflict across Europe have dipped lower in recent days,
in Ukraine have in Ukraine that has built on top of an existing and Asian demand for LNG has soared, limiting
exacerbating an existing energy crunch crisis in Europe. how much gas can be sent to European ports.
energy crunch crisis in The April contract at the hub briefly settled The crisis has prompted several EU mem-
Europe at €345 per 1,000 cubic metres at around 08:30 ber states to rethink their reliance on Russian
GMT, equivalent to $3,990 per cubic metres. Its energy, including Germany, which has halted the
average for the day was €227. certification process for Russia’s Nord Stream 2
Pressure has been rapidly building on Euro- pipeline that is required for the project to ever
pean gas prices since Moscow began its military flow gas. Since then, Berlin has announced it
campaign in Ukraine. Prices were already at will devote itself to building two LNG import
record levels in recent months as a result of esca- terminals in north Germany that can serve as a
lating tensions between Russia and the West, as replacement.
well as a sharp rebound in demand following the Italy, another important market for Russian
easing of coronavirus (COVID-19) restrictions gas, has similarly announced plans to reduce
and global supply constraints. its reliance on its main supplier, Gazprom.
There are mounting concerns that the conflict Italian officials were in Algeria last week to dis-
in Ukraine could lead to a disruption in Russian cuss bolstering supply from the North African
gas transit via the country, even though, for the country.™

POLICY

Dutch safety watchdog stays Groningen

production still a risk

NETHERLANDS A Dutch safety watchdog has warned against Despite calls to postpone the field’s closure,
resuming extra gas flow at the giant Gronin- the government has refused to alter its plans even
The government has gen gas field, even though Europe finds itself in further. And on March 8, the Netherlands’ State
already revised its the grip of an acute energy crisis as the war in Supervisor for Mines, which advises the gov-
production quota for Ukraine continues. ernment, stressed that production still posed a
Groningen for this year. Groningen is the largest field in Europe out- safety risk to people in the area.
side Russia, and at its peak it produced 88bn “Only once gas production has been phased
cubic metres of gas in 1986. But production out and the houses that need it have been rein-
activities caused earthquakes, and eventually forced, wil Groningen be just as safe as the rest
the Dutch government took action in 2014, and of the Netherlands,” Theodor Kockelkoren, the
ordered the NAM joint venture between Shell inspector-general of the supervisor, said in a
and ExxonMobil to close down the field. Its full statement.
shutdown was initially scheduled for 2030, but Still, the Netherlands may be forced to
the target was brought forward in 2019 to 2022. take action as its own consumers face soaring
The government has already revised the energy bills, as do consumers across Europe.
yearly production quota for the year ending The EU may even put pressure on the govern-
October 1, 2022 once in light of how tight the ment to shift its position, especially if Russia
gas market in Europe has become, opting in Jan- makes good on its threat to disrupt gas deliv-
uary to nearly double it to 7.6 bcm, from 3.9 bcm. eries to the continent. The bloc is also looking
But it insists that the field will cease production to expand LNG imports, particularly from the
altogether as planned in October this year. US and Qatar. ™

P12 www. NEWSBASE .com Week 10 10•March•2022