Natural gas prices for Europe to stay high for long time

Oil&Gas Materials 18 December 2021 13:42 (UTC +04:00)
Natural gas prices for Europe to stay high for long time

BAKU, Azerbaijan, Dec.18

By Leman Zeynalova – Trend:

Natural gas prices for Europe will stay high for a long time, as no direct options are available to put things in order, Cyril Widdershoven, a Middle East geopolitical specialist and energy analyst, a partner at Dutch risk consultancy VEROCY, and Global Head Strategy Risk at Berry Commodities told Trend.

The ICE Dutch TTF month-ahead January contract — the continental benchmark — settled at 142.76 euros per megawatt hour on Dec.16 ($46.50 per million Btu), a nearly ninefold increase from the same time a year ago, and a 50 percent rise since the start of December. On Dec.17 prices had retreated, to settle at €134.77/MWh, seemingly due to a drop in EU carbon futures and a reassessed weather forecast.

“European markets are much more liberal, so parties (companies) will decide which price they are willing to pay, or are able to pay without crushing consumers. The latter is not going to be solved very quickly, especially not as long as renewable investments or the misconception that solar and wind are the salvation of all is still in place. For instance, the last days in the Netherlands solar-wind production has been almost ZERO, so a huge gap is there between expected supplies and demand now for natural gas, coal and nuclear,” he said.

At the same time, Widdershoven noted that European countries, such as Belgium or Germany are still going to cut nuclear and coal power Generation, even put it all out in the next coming years.

“This situation will only increase potential demand for gas and potentially even European wide for coal. A real game changer, even that we all will not want this, is a major new COVID crisis or Omicron lockdown. If that happens, possible extra demand could fade, but in reality also than demand will be strong. No real gamechanger for 2022, as other new options will take 5-8 years to be put in place, while Russia is definitely not going to push additional gas into the market, looking at the Nordstream2 and Ukraine issues,” he concluded.


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