Page 13 - GLNG Week 08 2023

GLNG EUROPE GLNG

European gas prices slump

to 18-month low

EU THE front-month contract at Europe’s premier energy crisis is far from over. Expectations are
TTF gas hub dipped below €50 per MWh ($567 that the market will remain tight for several more
Europe has enjoyed per 1,000 cubic metres) on February 21 for the years, before a wave of new LNG supply comes
warm weather, ample first time this year, amid easing fears of short- on stream in the middle of the decade.
LNG supply and high ages, warm weather, ample LNG and lower In the nearer term, the outlook will hinge
levels of storage. industrial demand. largely on developments in China, which is
The March TTF contract averaged €49.3 per expected to see an economic recovery and a
MWh for the trading session – down from €140 subsequent revival in LNG imports this year
as recently as early December. European gas after easing its COVID-19 restrictions. In pos-
prices have fallen by as much as 85% since spik- itive news for European consumers, however,
ing in August last year, reflecting growing trader the Freeport LNG terminal in Texas secured
confidence that the continent will not only make approval to restart production at one of its lique-
it through this winter with enough gas in stock, faction trains on February 21. The facility was a
but is in a good position to avoid shortages next major supplier to the European market prior to
winter as well. its shutdown last year after an explosion.
Europe’s gas storage facilities are currently Reflecting the impact of high prices on Euro-
63.7% full, representing a historically high level pean demand this year, Eurostat data shows that
of utilisation for this time of year. This is not only EU gas consumption was 19.3% lower between
because of the aforementioned factors, but also last August and January this year versus the aver-
mandatory targets that the EU introduced last age for the same six-year period between 2017
summer for member states to bolster stocks and 2022.
before winter. The drop in demand was more than enough
The record low price at TTF comes as the to fulfil the goal that Brussels set as part of its
first anniversary of Russia’s invasion of Ukraine REPowerEU plan to cut reliance on Russian gas
nears. Moscow is widely accused of weapons- The member state that reduced gas consumption
ing its gas supply over the past year, restricting by the least percentage was Ireland, which cut
volumes in order to put pressure on the West use by only 0.3%. On the other hand, Finland,
to make concessions in the conflict. But even Lithuania and Sweden cut demand by 57.3%,
though Russian pipeline gas flow to Europe is 47.9% and 40.2% respectively.
not at only 10-15% of the level it was a year ago, The extent of the decline grew larger over the
gas prices have rolled back to low levels not seen course of most of the August 2022-January 2023
since late 2021. period. Demand was 14% lower than the five-
Gas prices nevertheless remain significantly year average in August, 14.3% lower in Septem-
higher than in previous years, meaning that the ber, 24.7% in October and 25% in November. ™

Week 08 24•February•2023 www. NEWSBASE .com P13