MOSCOW: The longer natural gas prices remain at record highs in Europe this year, the more markets feel that Russian gas should not be seen as a quick fix to the problem, at least not until the end of this winter.
“Overall gas production in Russia in the three quarters of 2021 was 12% and 2.6% higher than a year ago and in 2019. But that was not enough to immediately increase supply of the EU, “said analysts at Bloomberg NEF said in a note dated Oct. 12.
The fundamentals have changed now. Ronald Smith, executive director and senior oil and gas analyst at Moscow-based BCS Global Markets, told Arab News in an email message: âIn 2021, domestic demand in Russia increased significantly year on year. ‘other. This is at least in part due to weather conditions, as 2020 may have been the hottest year on record and 2021 has been quite close to the 10-year norm. “
“There has been a strong demand to fill home storage in Russia before the start of the heating season on November 1,” Smith added.
Given the circumstances of the pandemic, Putin’s administration did not want to take any risks. As a result, Russia ranked among the “last 5” gas exporters whose overseas shipments in the third quarter of 2021 fell the most in absolute terms compared to the same quarter of 2019, according to a presentation by the U.S. company Cheniere Energy, Inc. at an EIA event on November 16.
Gazprom is also facing capacity constraints. âThe company currently produces 1.5 billion cubic meters per day. This is effectively 100 percent of the capacity. They might be able to handle 1.55 Gcm / d, but not for very long, and that should be reserved when the weather gets colder, say, -20C in Moscow and -5C in Frankfurt, âSmith said. Arab News.
Responding to Arab News Question of the magnitude of the increase in Gazprom’s shipments to Europe over the next 3 months, if the regulatory problems of Nord Stream 2 had been resolved, the analyst said: “Not much at this stage , unless Gazprom is willing to pull gas from Russian Storage, which is full at the moment.
There seems to be a consensus among industry experts that the high gas prices in Europe this year are the result of a confluence of several factors such as abnormal weather conditions, lower European production, competition with Asia on the limited supply of LNG and the “green push.”
European natural gas spot prices rose 41% in November. On November 30, the Dutch TTF Gas Futures, a European price benchmark, with delivery in January 2022, closed down 1% from the previous day at â¬ 92.5 after jumping more than 5% in the early morning exchanges, according to data from the Intercontinental Exchange, Inc.