Thursday, 28 November 2019 10:56

Gas prices collapse, EU

European gas storages are full by 96%, which is a record indicator. The French newspaper Les Echos has announced this news, citing the consulting agency Cedigaz. The European companies have actively purchased both pipeline gas and LNG throughout this year. Besides, import of LNG to Europe increased by 80% in the 10 months of this year. According to weather forecasters, frigid weather will cover Europe this year.

Gas import in Great Britain, the Netherlands and Greece was increased by more than three times. The import growth indicator in France, Italy and Spain totaled 50-75%. The monitoring association GIE reported in October that reserves in the European gas storages reached unprecedented 100.18 bcm. Purchases of big volumes of gas stimulated record low prices for blue fuel this year.

The main reason is the delay of the Southern Gas Corridor construction, to be more exact, its European section – Trans Adriatic Gas Pipeline, the main alternative route of gas supply from the Caspian region, as well as the delay of the Nord Stream 2 construction – due to the uncertainty of supplies to Ukraine. The supply is exceeding demand in the world gas market for the second year in the row, which pushes prices down.

It was expected that it would be only China to increase LNG purchase at least by 30% (they grew by 40% vs. the figures of 2017 in 2018). But LNG supply to this country grew only by %14 over the past 10 months. Demand decline for LNG was fixed in America and Near East.

These factors coincided with the growth of shale gas production in the USA and with the launch of new LNG capacities, including in Russia. Underwhelming LNG consumption growth provoked LNG gas price collapse also in the spot market. In some cases LNG was sold cheaper than its prime cost. First of all it touched the American product which was shipped to Europe this year in large volumes at fire-sale prices, the European media sources report.

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