News Trending

Europe’s Gas Buying Slows on Expectations of Further Price Crash

By 305 0

Despite a recent drop in prices, the rate of natural gas purchases required to refill Europe’s storage sites is slower than usual for this time of year. Some buyers are betting on further price drops and are therefore holding off on making purchases.

While the benchmark futures for natural gas have decreased significantly from record highs seen last summer, consumption remains slow to recover from the crisis lows. While reduced fuel usage has meant that global supplies are currently sufficient to meet European demand, gas producers and traders caution that the situation remains fragile, and a delayed or uncertain rebound in consumption could disrupt the market balance.

According to Klaus Reinisch, group chief sales officer at MET Holding AG, consumers seem confident and are being told by political leaders that the worst is over. Reinisch believes that this confidence is leading some consumers to hold off on purchasing natural gas in anticipation of even lower prices.

However, even if prices drop to as low as €10 per megawatt-hour, Reinisch does not expect these lower prices to last. Europe’s heavy reliance on liquefied natural gas, which replaced Russian pipeline fuel, leaves it exposed to market moves and price volatility.

While consumption from industry and demand from Asia could lead to a resurgence in natural gas demand and price rebound, analysts from Goldman Sachs Group Inc. and Boston Group Consulting see the possibility of prices rising above €100. Reinisch believes that the natural gas market is still vulnerable.

Picture Courtesy: Google/images are subject to copyright

News Trending

France sends Germany gas for first time amid Russia energy crisis

By 392 0

In response to mounting energy strain, France has delivered gas to Germany for the first time in an act of “European solidarity.” The pipeline-delivered gas is a component of a pact between the nations to reduce energy shortages following Russian shutoff of the taps to Europe.

Despite providing less than 2% of Germany’s daily demands, the increased flow is appreciated as Berlin fights to diversify its energy sources. Since the invasion of Ukraine, Russia has been charged with exploiting gas supplies as a weapon against the West.

The French grid operator GRTgaz announced that it would initially supply 31 gigawatt hours (GWh) per day via a pipeline from the village of Obergailbach on the country’s border.The additional gas flow has a 100 GWh daily maximum capacity, it was added in a statement. 

In the energy solidarity agreement last month, Germany committed to aid France with gas supplies in exchange for Germany agreeing to supply additional electricity to France as needed.

“We would have significant problems right now if we didn’t have European unity and an integrated, united market,” French President Emmanuel Macron said on Wednesday. Russia shutting off the gas is less of an issue for France because most of its energy requirements are met by Norway and through supply of liquefied natural gas.

Gas prices increased as a result of Russia’s invasion of Ukraine in February, and this winter EU customers will pay record prices.

Germany had previously gotten 55% of its gas from Russia. It has decreased this to 35% and eventually wants to stop all imports.

Despite the detrimental effects on the environment, Germany is also increasing its usage of coal and prolonging the life of power plants that were scheduled to close.

During her 16 years in office, former German chancellor Angela Merkel claimed she did not regret relying on Russia as a significant gas provider.

This winter, the German government plans to reduce the consumption of lighting and heating in public buildings by 2%.

Picture Courtesy: Google/images are subject to copyright

News Trending War

EU agrees to cut gas use over Russia supply fears

By 469 0

EU energy ministers have decided that countries will reduce their gas use if Russia stops supplying them. The EU countries have now agreed to a voluntary 15 percent between August and March after being locked in negotiations since the notion was floated last week.

The Czech Republic, which is currently in charge of rotating the EU chair, tweeted, “This was not a Mission Impossible!”. Documents obtained by the BBC, however, indicate that the agreement had been weakened and that certain nations may now request exemptions. The EU warned that Russia was “constantly using energy supplies as a weapon” and that the goal was to save money before winter.

If supplies run out, the voluntary agreement would become obligatory. The EU said that some nations, including Ireland, Malta, and Cyprus, which are not connected to the EU’s gas pipelines, would be exempt from any mandatory gas reduction orders since they would not be able to seek alternative supplies.

In order to reduce the possibility of a crisis in the supply of power, the Baltic nations, who are not connected to the European electricity grid and heavily rely on gas for electricity production, are also exempt from mandatory targets.

Initial calculations showed that even if all exemptions were used, the EU would still lower demand to a level “that would get us safely through an average winter,” according to Kadri Simson, European Commissioner for Energy.

She also discussed efforts to increase the supply of alternative gas from nations such as Azerbaijan, the United States, Canada, Norway, Egypt, and Israel.

Picture Courtesy: Google/images are subject to copyright