BAKU, Azerbaijan, September 14. Gas price caps proposed by Europe will not solve the fundamental problems, Trend reports with reference to Rystad Energy.
European gas prices have plummeted after the European Union started discussing whether to impose a price cap on some or all of its gas imports.
“While the European Commission originally proposed only hitting Russian volumes, other sources like Norway may also be affected. Months of geopolitical wrangling have left the European gas market whiplashed, with volatile prices stemming from lack of supply, potential market intervention, and wider uncertainty. In the view of most experts and policymakers, the gas market is broken – but how it should be supported or fixed is an ongoing conversation with no clear resolution in sight,” reads the latest report from Rystad Energy.
The company analysts point out that the European gas market is unrecognizable from a year ago.
“In the past month, gas has traded in the range of $195 to $346 per megawatt-hour, which corresponds to an oil price of between $331 and $588 per barrel. Gas is now the most important commodity in Europe. Germany spent about €35.39 billion in 2021 on imported pipeline gas at the German border, or about 1% of the country’s gross domestic product (GDP). This year Germany had already spent €30.84 billion on gas at the half-year mark due to the soaring gas prices, according to government agency BAFA. If this continues, the country is on track to double its expenditure on gas by the end of this year,” says the report.
Rystad Energy believes that replacing just half of the gas flows from Russia will be a monumental task requiring huge investment and time.
“The role of gas in the European power mix is assured for decades to come, but without a restoration of Russian flows or increased supply from elsewhere, it will likely feature less.”
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