Gas prices in Europe reach highest level since December: What’s behind increase?
Photo: Gas prices in Europe have risen to their highest since December (Getty Images)
Natural gas prices in Europe have been at their highest level since December 2023 due to concerns about supplies through Russian pipelines, which is driving up maritime imports, according to Bloomberg.
Futures on the TTF hub in the Netherlands have risen by 2% to €41.2 per megawatt-hour (about $460 per thousand cubic meters). This increase has been observed over the past two weeks.
The agency notes that Russian gas continues to flow through the Sudzha entry point on the border, even after Ukrainian forces launched a surprise attack last week. Additionally, Ukraine announced on August 11 that Russian troops set a fire at the occupied Zaporizhzhia Nuclear Power Plant, although radiation levels at the site appear to be normal.
Increased gas prices during the crucial storage season are likely to redirect more liquefied natural gas (LNG) to the US region, the main supplier of fuel to Europe. LNG imports to Europe fell in July, while Asia received the highest monthly volumes from the US since 2021, according to ship tracking data collected by Bloomberg.
According to S&P Global Commodity Insights, reduced LNG demand in Asia this month (partly due to lower temperatures) and rising geopolitical risks in the Middle East are affecting the profitability of LNG shipping routes, “opening up the potential for more US cargoes to divert to Europe”.
bloomberg.com
However, competition for LNG with Asia remains fierce, as demonstrated last month, showing how quickly the flow of fuel to Europe can deplete. Heatwaves, particularly in Asia, have helped drive demand in the region.
It’s worth noting that fighting in the Kursk region has led to Russia losing control of the Sudzha gas measurement station. This is the only entry point to Ukraine’s gas transportation system through which Russian gas is transited to Europe. The transit contract expires at the end of 2024.
Volodymyr Omelchenko, Director of Energy Programs at the Razumkov Center, does not rule out the possibility that Russia may decide to cut off transit prematurely after the loss of the station.
