Experts believe that gas prices in Europe will continue to rise. They shared this with Izvestia on December 13.

"On the European gas market, there is a seasonal rally: average gas prices at the largest hub in the region, TTF, rose by 18% from September to November 2024 (from $422 to $499 per thousand cubic meters). This has already led to an increase in electricity prices: the average price of electricity in Germany during the same period rose by more than 40%, from €79 to €112 per megawatt-hour (MWh)," noted Sergey Tereshkin, CEO of the oil and raw materials marketplace OPEN OIL MARKET.

He explained that under the current regulatory model, electricity prices in the European Union (EU) depend on the cost of balancing generation, with gas-fired power plants playing a key role in covering sharp spikes in energy demand. As a result, the rising cost of fuel for gas-fired power plants leads to higher electricity prices, the expert clarified.

According to Tereshkin, gas prices will continue to rise on the exchange during the winter.

Meanwhile, Dmitry Skryabin, a portfolio manager at Alpha Capital Management, added that weather is a significant factor in gas prices.

"Prices here are cyclical: they rise in the autumn and winter, then decrease by the end of March and into early summer, and after that, they rise again as the EU starts filling its underground gas storage facilities before the new heating season," he said.

He noted that this year, attention is focused on geopolitics, as there is still no clarity about whether contracts for Russian gas supplies via Ukraine will be extended. A decision on this issue is expected soon, as current contracts are set to expire at the end of December.

"Gas prices could rise further from current levels by the end of the season, unless there are any unforeseen events," Skryabin emphasized.

At the same time, Tereshkin pointed out that the cost of gas in Europe is still below the multi-year highs reached in 2022 during the peak of the energy crisis. For example, in November 2022, the average gas price at the TTF hub was $1,279 per thousand cubic meters.

"Prices are unlikely to return to those levels. First, EU countries have significantly reduced gas imports in recent years. According to the European Network of Transmission System Operators for Gas (ENTSOG), total gas imports to the EU, including LNG, amounted to 799 million cubic meters per day in the first nine months of 2024, which is 20% lower than the same period in 2022 (996 million cubic meters per day)," he explained.

He also noted that since the summer of 2022, EU countries have been deliberately saving gas in the energy sector, housing, and industry.

"In the medium term, the development of new LNG production plants in North America will help curb European gas prices. According to the Energy Information Administration (EIA), the total capacity of LNG export terminals in the US, Canada, and Mexico will increase from 320 million cubic meters per day at the end of 2024 to 680 million cubic meters per day at the end of 2028. As a result, LNG imports will become more accessible to EU countries," Tereshkin speculated.

In October, Gazprom CEO Alexey Miller stated that Europe's gas market policy could lead to a new price shock and supply disruptions. He described the situation in the European gas market as poor and agreed with the assessment that demand for the energy resource is being intentionally destroyed.

Translated using ChatGPT

Sourse: iz.ru/1807000/2024-12-13/eksperty-sprognozirovali-rost-tcen-na-gaz-v-evrope