High gas prices to linger in Europe by late 2022

Oil&Gas Materials 16 April 2022 13:53 (UTC +04:00)
Laman Zeynalova
Laman Zeynalova
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BAKU, Azerbaijan, April 16. The high gas price environment in Europe is set to linger through the rest of 2022, Trend reports with reference to the International Energy Agency (IEA).

“Forward curves as of the end of March 2022 indicate that TTF is set to average at USD 35/MBtu, Asian spot LNG at USD 32/MBtu and Henry Hub at USD 5.5/MBtu in 2022. Uncertainties surrounding Russian gas supply and high restocking needs in all key gas regions are set to provide strong support to gas prices in 2022. TTF is expected to trade at a premium of USD 2-3/MBtu above Asian spot LNG, enabling higher LNG inflow into Europe. Oil-indexed LNG contracts are expected to average at around USD 15/MBtu, reflecting the surge in oil prices during Q1 2022,” reads the IEA report.

The agency notes that in Europe, TTF prices averaged at a record of USD 32/MBtu – more than five times their five-year average during the preceding heating seasons.

“The strong increase in gas prices occurred despite relatively mild winter temperatures (moderating space heating requirements) and was largely driven by the supply side. Europe started the heating season with storage levels 17 percent below their five-year average, which exerted upward pressure on winter contracts. In addition, gas pipeline deliveries from Russia fell by close to 25 percent y-o-y during the heating season, as Gazprom drastically reduced its short-term sales,” says the report.

IEA analysts note that the outbreak of war in Ukraine at the end of February 2022 created a moment of unprecedented market uncertainty, fuelling volatility and driving up European gas prices to record levels. Intraday gas prices on TTF soared to an all-time high of EUR 345/MWh (or USD 110/MBtu) on 7 March 2022.


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