Page 9 - FSUOGM Week 37 2022

FSUOGM PIPELINES & TRANSPORT FSUOGM

there was a major breakdown in Serbia’s two an official visit to Baku to meet with President
biggest coal plants that caused widespread out- Aliyev and other senior officials earlier this year.
ages, prompting EPS to start importing unprec- Azerbaijan’s partnership with Bulgaria in the
edented quantities of electricity via transmission energy field seems to be more profitable, as the
system operator Elektromreza Srbije (EMS). The two states have agreed to swap gas for electric-
share of power from abroad in domestic con- ity. Bulgaria is a major electricity producer and
sumption reached as much as 45%. is ready to supply Azerbaijan. Unlike Bulgaria,
Azerbaijan produces electricity by using natural
Bulgaria taps new energy sources gas, which affects the volume of exported natu-
Obviously, Serbia is not the only regional state ral gas. However, with Bulgaria’s swap deal, Baku
concerned with its energy security in light of would be able to save more gas for export and
the changing security architecture of Europe. re-route it to Bulgaria. Indeed, the volume of
Bulgaria, which had its supplies from Russia natural gas exported to Bulgaria will increase to
cut off in April, is another country that has close 1bn cubic metres when the IGB becomes fully
contact with Azerbaijan in order to ensure the operational this year.
additional flow of natural gas. Earlier this year, In light of deteriorating relations between the
Bulgarian and Azerbaijani senior officials held West and Russia and the rising diplomatic stand-
several meetings to discuss the possibilities of off, the global energy crisis will hit major Euro-
gas exports. The extra gas export to Bulgaria is pean countries badly and cause a more profound
expected to be delivered through the 182 km Gas crisis. Therefore, the importance of alternative
Interconnector Greece-Bulgaria (IGB), which is suppliers like Azerbaijan will rise immensely.
still under construction and could become oper- The Caspian country can deliver additional nat-
ational in early October 2022. ural gas to Southern Europe and Balkan coun-
However, according to Azerbaijani Energy tries such as Serbia and Bulgaria, which may find
Minister Parviz Shahbazov, “Azerbaijan has sup- themselves in big trouble soon.
plied 555 million cubic metres of natural gas to Fuad Shahbazov is an independent policy
Bulgaria since last year. Since July this year, daily analyst focusing on regional security issues in
gas transportation to Bulgaria has increased to the South Caucasus and a Chevening FCDO
2.6 million cubic meters.” In order to cement scholar at the University of Durham School of
the ongoing negotiations with Azerbaijan, Bul- Government and International Affairs (SGIA) .
garia’s former prime minister Kiril Petkov paid He tweets at @fuadshahbazov. ™

PERFORMANCE

Goldman Sachs predicts winter slump

in European gas prices

EUROPE US investment bank Goldman Sachs has pre- as needed.”
dicted that European natural gas prices could The bank predicts that storage facilities
The consensus so far more than halve by the end of winter, contrary should reach 90% of capacity by the end of Octo-
has said otherwise. to most forecasts so far that have predicted prices ber, and remain at over 20% of capacity even at
to remain elevated as they are now. the end of March next year.
Europe has “solved” its natural gas crisis for “This, in our view, will set the stage for the
this year, the bank’s analysts said in a report pub- sense of urgency to destroy demand we see cur-
lished on September 13, drawing attention to the rently to be gradually replaced by a sense of mar-
increase in storage volumes, now close to 85% of ket relief for having made it through winter,” the
capacity, increased LNG supplies and demand bank said.
destruction. These factors have more than made As a result, Goldman Sachs projects that gas
up for the steep decline in Russian volumes so prices at European hubs could slide to as low
far, and the risk that Moscow could cut off gas as under €100/MWh ($1,065/1,000 m3) by the
completely this winter. end of March, compared with more than €200/
“The indefinite reduction in Nord Stream 1 MWh right now, assuming that there are typ-
exports to zero leaves north-west Europe with- ical winter temperatures. Previously the bank
out any Russian gas going forward,” Goldman had forecast a price of €213/MWh for the end
Sachs analysts said. “And while we often hear of winter.
the question of what this will do to storage, we The consensus among analysts remains that
believe a better approach is to ask what this will gas prices in Europe will remain elevated as they
do to prices, so that storage continues to build are now throughout winter. ™

Week 37 15•September•2022 www. NEWSBASE .com P9