On Wednesday, October 6, gas prices in Europe hit their all-time high.
During the auction, the cost of fuel at the TTF hub in the Netherlands rose by almost 40% - to € 161.5 per MWh, or $ 1919 per 1,000 cubic meters.
The value became the highest ever observed.
This is evidenced by the data of the London stock exchange ICE.
However, then the cost of gas dropped below $ 1400 per 1,000 cubic meters.
Note that gas in Europe has been rapidly increasing in price since mid-August and has grown in price by more than 200% since then.
In Europe itself, the main reason for the current energy crisis is the unfavorable conditions on the gas market.
This, in particular, was stated on Wednesday by the Deputy Chairman of the European Commission Frans Timmermans.
“It's all about market conditions.
The demand for energy resources today has reached its maximum levels over the past 25 years, ”Timmermans is quoted by TASS.
At the same time, the gas reserves in the region are no longer sufficient to fully meet the current needs of European consumers.
Alexey Korenev, an analyst at FG Finam, told RT about this.
According to him, a significant amount of fuel reserves was used up during the previous winter, when demand rose sharply due to cold weather, and in summer due to hot weather and increased energy consumption for air conditioning.
In addition, as the expert noted, Europe was left without American liquefied natural gas (LNG).
In September, hurricanes and storms forced US companies to temporarily halt energy production in the Gulf of Mexico, resulting in supply delays.
Although the situation is now gradually stabilizing, and most of the production facilities are working again, the States are in no hurry to send gas to Europe.
“We see that China and the entire Asia-Pacific region are recovering very actively from the consequences of the pandemic.
Today these are the main gas consumers who are ready to buy energy resources at a higher price.
Therefore, part of the American gas goes not to Europe, but to Asia, ”added Aleksey Korenev.
At the moment, the storage facilities of the countries of the European Union and Great Britain are in total filled by about 76%, although a year ago this value was about 95%.
The smallest gas reserves today are in Germany (69.31%), Sweden (66.42%), the Netherlands (58.5%), Austria (54.84%) and Portugal (52.08%).
These figures are given by the Association for Gas Infrastructure in Europe (GIE).
“In principle, the current levels of stocks will be sufficient if the winter turns out to be mild, like we have now in autumn.
However, in the event of severe cold weather, the storage capacity should be at least 86-90%.
These volumes have to be bought somewhere, "Korenev emphasized.
Work on bugs
Curiously, in the current situation, five countries of the European Union - France, Spain, Greece, Romania and the Czech Republic - have called for an investigation to establish the true cause of the rise in gas prices.
This is stated in a joint statement by the ministers of economy and finance of these states.
“With regard to gas, it is necessary to conduct a study of the work of the European gas market in order to find out why the existing gas contracts were not enough.
We should also formulate general guidelines for gas storage in order to mitigate and smooth out price increases, ”the document says.
© Volkerpreusser / Alamy / Legion Media
However, the European Union believes that the rush in gas prices could be partly caused by the mistakes of the European Commission itself.
This statement was made on Wednesday by Hungarian Prime Minister Viktor Orban.
“The European Union must change its policy, since at least part of the reason for the rise in prices is the mistakes of the European Commission.
We have to change some of the green norms, otherwise everyone will suffer, ”Orban said.
As the head of the analytical department of AMarkets Artyom Deev noted in a conversation with RT, the actions of the European authorities led to distortions in the "green" policy of the region. So, in recent years, the EU has been actively closing coal-fired CHP and nuclear power plants, hoping that renewable energy sources (RES) will increasingly replace hydrocarbon fuels. Meanwhile, the available renewable energy capacities are not enough, and the problem of a sharply increased demand can be solved only through the use of traditional energy raw materials, the analyst explained.
“Against this background, energy companies have already started to go bankrupt in Europe.
This threatens further problems in the sector and higher prices.
Since the contribution of energy resources to the production of absolutely all goods - from food to cars - is quite high, after some time the EU will face a serious acceleration of inflation, ”added Deev.
Finding the culprit
An additional blow to the European energy market was the regulation of fuel prices by the European Commission, says Aleksey Korenev.
As the analyst noted, earlier the EU insisted that gas purchases be made not on the basis of long-term contracts pegged to the price of oil, but on the exchange principle.
“At that time, the market was at the mercy of the buyer, and Europe could dictate its terms.
We were at a disadvantage, and the Europeans decided to be greedy.
Now we see a typical stock market panic.
This is a terrible thing, since there are a huge number of speculators on the exchange trying to warm their hands on those who are rushing about and ready to buy gas at any price.
In turn, those with whom long-term contracts were signed receive gas at $ 280 per thousand cubic meters, and not at $ 1.9 thousand, ”the specialist explained.
It is noteworthy that in September European politicians tried to blame Russia for the rise in gas prices.
A group of MEPs sent a letter to the European Commission with a call to investigate the actions of Gazprom, which allegedly could lead to such a price jump.
Gazprom rejected these allegations and noted that the company supplies gas in accordance with the requests of consumers, fully fulfilling its contractual obligations.
The holding also added that they are striving "to satisfy requests for additional supplies due to the existing possibilities."
At the same time, the Kremlin believes that the rise in gas prices in Europe is associated with a number of factors, and only non-professionals can see this as Russia's fault.
This was announced on Wednesday by the press secretary of the President of the country Dmitry Peskov.
“We insist that there is and cannot be any role for Russia in what is happening on the gas market in Europe.
Russia has fulfilled, is fulfilling and will continue to fulfill - in the most thorough way, consistently - all the obligations assumed under the existing contracts, "Peskov emphasized.
Later, Vladimir Putin himself expressed a similar position.
“Abrupt, rash actions can lead and, judging by the current market situation, are already leading to serious imbalances - such as we are now seeing in the European energy market, where several adverse factors have developed simultaneously this year,” the Russian leader said.
According to him, the European Commission switched to short-term supply contracts, and this decision turned out to be erroneous, since "it does not take into account the specifics of the gas market due to a large number of uncertainties."
“Russia has always been and is a reliable supplier of gas to its consumers all over the world,” Putin said, noting that the contracts stipulate the minimum and maximum volumes of supplies, and there is not a single case in history when Gazprom refused to increase supplies.
© Jurgita Vaicikeviciene / Alamy / Legion Media
As Aleksey Korenev explained, Gazprom's gas supplies to the EU are limited by the norms of the EU itself.
Thus, according to the established rules, half of the fuel purchased by Europe should not be supplied from Russia, but purchased from alternative suppliers.
“Europe, as they say, shot itself in the leg.
The risk management specialists who made decisions on the EU gas directive in relations with Gazprom are surprising.
If something else can be done with the aboveground gas pipeline, then what alternative suppliers can be in the situation with the underwater pipe, which does not imply tie-ins, is not entirely clear, ”the specialist noted.
In his opinion, in the near future the situation with gas prices will continue to remain uncertain - in theory, quotations may rise to $ 8-10 thousand per 1,000 cubic meters.
However, if the European Union concludes a new supply agreement with Gazprom or gas exports from the United States sharply increase, prices may fall back to $ 1,000, the expert said.
“At the same time, Europe is trying to shoot itself in the second leg, delaying the certification of Nord Stream 2.
Earlier, Germany announced that the pipeline could be certified only by January 8th.
However, by January they can freeze, ”Korenev concluded.