Spot gas prices in Europe at the auction on December 24 continued to decline after a strong fall the day before. The cost of January futures in the European hub TTF in the Netherlands fell on Friday afternoon to $ 1260 per 1,000 m³. In just two days, prices fell by about 40%, writes RBC.
On December 21, spot gas prices in Europe for the first time in history exceeded $ 2,000 per 1,000 m³. In the morning, Gazprom stopped the flow of gas to Germany via the Yamal-Europe gas pipeline due to the refusal of the Russian company to book the pumping capacity for December 21. At the auction, they offered pumping capacity of 89.1 million cubic meters per day, but no one took advantage of this.
The rise in quotations could also have been caused by a cold snap. However, after a record rise in gas prices, at least 30 LPG tankers changed course and headed not to Asia, but to Europe. About it writes Bloomberg citing global shipping tracking.
As Rusenergy partner Mikhail Krutikhin explained to The Insider, such a situation when gas prices in Europe are higher than in Asia is quite rare. According to him, Gazprom’s position played an important role in the price jump. The Russian company is seeking special conditions for the Nord Stream 2 gas pipeline, which falls under European antitrust laws, according to which gas suppliers and pipeline operators should be separated, and alternative suppliers should be able to access half of the pipeline’s capacity.
Also, Gazprom, as part of the “war with Ukraine”, is trying to deprive it of the possibility of gas transit. In addition, the Russian company seeks to “show the Europeans that they will not be able to do without dirty energy, without hydrocarbon raw materials.
The reason for the collapse in gas prices was not only the expectations of the supply of liquefied gas by sea, but also the strengthening of wind in Europe, which made it possible to increase electricity generation using wind generation. According to the WindEurope association, on December 23, the share of wind generation in total electricity consumption in Europe soared to 13.8%, while on December 21, this figure was at a three-month low of 5.5%.
“If we had strong or moderate winds, we would not have seen such price spikes,” said Rory McCarthy, chief analyst at Wood Mackenzie.
Fraunhofer Institute analyst Bruno Burger noted that in Germany, Europe’s largest economy with the continent’s highest wind power capacity, the combined output of both onshore and offshore wind farms has fallen by about 16% since the beginning of the year.