Page 5 - FSUOGM Week 49 2021

FSUOGM COMMENTARY FSUOGM

The European gas market in graphs:

falling, according to the AGSI+ aggregated as it transitions further to renewables as part of
gas storage inventory. its Green Deal. Given the cost of gas bought on
The alternative to creating an expensive EU the open market, analysts expect some sort of
strategic gas reserves would be to give approval fudge to appear.
to Russia’s new Nord Stream 2 gas pipeline that “The European Commission appears com-
taps large reserves in the Arctic Yamal fields mitted to its Energy Transition strategy and will
complex. The new pipeline has a nameplate look only to add supranational, strategic gas
capacity of some 50bn cubic metres and Europe storage as a response to the extraordinarily high
is estimated to have a 15 bcm deficit, so Nord gas prices of 2021,” BCS GM said in a note. “A
Stream 2 could bring the current crisis to an tweak to the strategy, not a wholesale change. In
end very quickly; the pipeline has already been short, Europe remains committed to its energy
filled with technical gas and could literally be transition, and appears to be looking past natural
turned on tomorrow. However, Russia has made gas to the (still unproven) hydrogen economy.
it very clear it wants not only to see Nord Stream For our part, we think individual European gas
2 operational but also wants Europe to commit companies are likely to take a different approach
to new long-term contracts to ensure Russia’s for managing the risk of gas prices and will likely
gas export business to Europe for the next dec- increase the purchase of gas under long-term,
ade, something that the EU is trying to avoid oil-linked contracts to diversify their price risk
as it sees gas demand falling in the next decade at least somewhat.” ™

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