MOSCOW, May 13. Exchange gas prices in Europe in autumn 2023 will depend on weather conditions, in case of hot weather in summer and early At the beginning of the heating season, they may return to $600-800 per thousand cubic meters, Sergei Kaufman, an analyst at FG Finam, shared his opinion.
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“The cost of gas at the beginning of the heating season will primarily depend on weather conditions. In case of hot weather in summer and an early start of the heating season, we consider it likely that prices will return to the range of $600-800 per thousand cubic meters. At the same time, in the event of favorable weather and the absence of force majeure on the supply side, we do not exclude the complete normalization of prices, which implies their return to the range of $200-300 per thousand cubic meters,» Kaufman said.
This week, exchange gas prices on the TTF index (Europe's largest hub located in the Netherlands) fell below $400 per thousand cubic meters for the first time since July 2021. At the same time, the occupancy of European gas storage facilities is currently above 60 percent, according to the Gas Infrastructure Europe (GIE) Association of Gas Infrastructure Operators in Europe, which is more than the average for the past five years. At the same time, Europe completed the gas withdrawal season on April 7 with reserves of 55.36 percent.
According to the expert, now the supply of liquefied natural gas (LNG) remains at an elevated level, and competition from China for free volumes, contrary to expectations, is practically not increasing. Against this background, at the current injection rate, the EU is almost guaranteed to be able to fill UGS facilities by more than 90 percent by the heating season, which is pushing prices down, Kaufman explained.
Answering the question of whether the decline in prices will affect the income of oil and gas companies, the expert recalled that for some American LNG suppliers, the price does not depend on the cost of gas in the EU and is formed based on the price of the American gas hub Henry Hub with amendments — for such companies volumes and forecasts on demand are important first of all.
«At the same time, for companies whose sales price depends on market prices, the current normalization of gas prices in the EU, of course, threatens to reduce profits. Gazprom, which, according to our estimates, will reduce the adjusted profit by 70 percent in annual terms,» Kaufman concluded. /20230418/gaz-1866082969.html» data-title='It will not be easy for Europe to replenish its gas reserves by winter, Gazprom said'>