Experts have predicted a rise in gas prices in Europe

Gas prices in Europe will continue to rise, experts believe. They told Izvestia on December 13.

"There is a seasonal rally in the European gas market: average gas prices at the region's largest hub TTF rose by 18% between September and November 2024 (from $422 to $499 per thousand cubic meters). This has already led to an increase in electricity prices: the average electricity price in Germany increased by more than 40% over the same period, from €79 to €112 per megawatt-hour (MW*h)," said Sergei Tereshkin, general director of OPEN OIL MARKET, a marketplace for oil products and raw materials.

He explained that under the current regulatory model, the price of electricity in the European Union (EU) depends on the cost of balancing generation: its role is played by gas-fired TPPs, which are the most convenient for covering sharp spikes in energy demand. As a consequence, the rise in the price of raw materials for gas-fired TPPs leads to an increase in the cost of electricity, the expert said.

In Tereshkin's opinion, in winter there will still be an increase in prices on the stock exchange.

In turn, portfolio manager of MC "Alfa Capital" Dmitry Skryabin added that the weather component is very noticeable in gas quotations.

"Prices here are cyclical: they grow in the fall and winter, by the end of March and until the beginning of summer there is a decline, and then growth again, because the EU begins to fill its underground gas storage facilities before the new heating season," he said.

The focus this year is on geopolitics, he said, because it is still unclear whether contracts for Russian-origin gas supplies through Ukraine will be extended. A decision on this issue is expected soon, because the current contracts expire at the end of December.

"By the end of the season, gas prices may rise further from the current levels if no force majeure appears," Skryabin emphasized.

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At the same time, Tereshkin pointed out that so far the cost of gas in Europe still remains below the multi-year highs recorded in 2022 at the peak of the energy crisis. For example, in November 2022, the average gas price at the TTF hub was $1279 per thousand cubic meters.

"Most likely, prices will not return to these levels again. Firstly, EU countries have been able to significantly reduce gas imports in recent years. According to the European Network of Gas Transmission System Operators (ENTSOG), total EU gas imports - including LNG - amounted to 799 million cubic meters per day in the first nine months of 2024: this is 20% lower than in the same period of 2022 (996 million cubic meters per day)," he specified.

He also noted that EU countries have been implementing targeted gas savings in the power sector, housing and industry since the summer of 2022.

"In the medium term, the commissioning of new LNG plants in North America will play a role in curbing European gas prices. The Energy Information Administration (EIA) estimates that the total capacity of LNG export terminals in the US, Canada and Mexico will increase from 320 mcm/d at the end of 2024 to 680 mcm/d at the end of 2028. As a consequence, LNG imports will become more affordable for EU countries," Tereshkin suggested.

In October, Gazprom head Alexei Miller said that Europe's policy on the gas market could lead to a new gas price shock and supply disruptions. He called the situation on the European gas market bad and agreed with the assessment that the demand for energy resources there is being destroyed purposefully.