BAKU, Azerbaijan, Sept.10
By Leman Zeynalova – Trend:
High gas prices in Europe won’t prevail indefinitely, Bronagh O'Hagan, Communications Director at Eurogas, an association representing the European gas wholesale, retail and distribution sectors in relation to relevant EU institutions, told Trend.
Gas prices in Europe have been growing since the beginning of the year, having almost quadrupled, exceeding the $700 mark per 1,000 cubic meters, according to ICE.
The cost of October futures on the TTF hub in the Netherlands reached $ 700.2 per 1,000 cubic meters, or € 57.56 per 1 MWh (based on the current EUR / USD exchange rate, ICE prices are presented in euros per MWh). A gas supply crunch is boosting the cost of producing power from the U.K. to Germany just as businesses reopen and people return to the office, increasing demand. Hot weather and low wind speeds are curbing renewable power production, boosting the use of fossil fuel-fired generation and pushing the price of coal up more than 70 percent in Europe this year. Europe can’t count on its own production either, with several outages disrupting flows from the North Sea. Domestic output is also in decline, with the giant Groningen gas field in the Netherlands possibly closing three years ahead of schedule.
“Europe’s markets have inbuilt financial instruments, like contractual agreements, to manage the risks of price volatility. The current gas prices show the markets are working - prices reflect supply and demand. We have experienced low prices which can be equally attributed to well-functioning markets,” she said.
O'Hagan pointed out that the EU’s supply-demand balance is healthy, with a good variety of supply sources and flexibility sources. “We are confident that current prices will not prevail indefinitely.”
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