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Quarterly report – Q1 2023 – International natural gas prices

Posted in International Gas Prices, Natural Gas Prices on

In the first quarter of 2023, European and Asian spot prices continued the downward trend observed since the summer of 2022, despite the fall in Russian pipeline gas deliveries. European gas prices have reached their lowest level since the summer of 2021 but remain two to three times higher than the historical average. These relatively calm market conditions are due to several factors: a milder than normal winter which has reduced gas consumption for space heating, continued strong LNG imports into Europe and lower gas consumption in all sectors. These developments have kept European storages at record levels, which is a bearish factor on forward prices.

Evolution of international gas prices in the first quarter of 2023

 In the first quarter of this year, the EU TTF price was 42% lower than in the previous quarter, at $16.8/MBtu (€54/MWh), returning to a level similar to that in the third quarter of 2021. The TTF bottomed out at $12.6/MBtu (€40/MWh) on the 20 March, its lowest level since the summer of 2021. European market fundamentals are bearish. It is estimated that in the first quarter of this year, EU gas consumption was 17% below the seasonal average. Against this background, continued strong imports of LNG and Norwegian gas have allowed to both replace Russian pipeline gas and ensure a very high level of gas storages.

Energy security and sustainability mean a restructuring of global gas supply and a reconfiguration of international gas flows

Posted in Analysis, Natural Gas Market, Outlook on

CEDIGAZ, the International Gas Association, has just released its « Medium and Long Term Gas and LNG Outlook 2023 », which provides projections on natural gas and low-carbon gases markets to 2050.

CEDIGAZ Reference Scenario assumes a strong acceleration of the energy transition towards a low-carbon economy, incorporating specific government targets and CO2 emissions reduction commitments, corresponding to a global warming of 2.1 °C by 2100. The evolution of the world energy mix is driven by strong energy efficiency improvements, a fast expansion of clean electrification and low-carbon technologies. CEDIGAZ 2.1 °C Scenario highlights that natural gas and low-carbon gases will play an important role in a context of the decarbonization of the world energy system. Natural gas will be gradually supplanted by low-carbon gases in OECD markets, whereas in non-OECD markets, especially in Asia, both natural gas and low-carbon gases will grow significantly in the long term. Additional investments in new international gas and LNG projects are required to meet future global demand. Achieving carbon neutrality, energy security and sustainability will mean profound changes in global gas dynamics and a rebalancing of global gas flows towards Asia. Decarbonization efforts imply the reduction of all GHG, including methane emissions, along the whole international supply chains. The expansion of low-carbon gases, especially hydrogen, requires a supportive and appropriate political and regulatory framework as well as an adaptation of natural gas infrastructure to a future low-carbon economy.

Quarterly report – Q4 2022 – International natural gas prices

Posted in International Gas Prices, Natural Gas Prices on

In the fourth quarter of 2022, average European and Asian prices fell back compared to the previous year. European prices have been extremely volatile in the short term, with periods of dramatic, weather-driven declines. The TTF price has fallen over the last four weeks to pre-war levels in Ukraine, a sign of unexpected easing in the European market as the Russian gas crisis intensifies. The drop in gas consumption, due to unusually mild weather and the decline in industrial activity, and the continued strong growth in LNG imports explain the very high level of European gas stocks, which reaches 930 TWh at the beginning of 2023. This situation has pushed down spot and forward prices and eased fears of tensions in the coming months.