Gas prices in Europe have now almost tripled after a record hike to nearly $2200 per thousand cubic metres at the end of December. But they could fall even below $500 or $200 per thousand cubic meters by 2025, RIA Novosti reported
The first tangible growth of gas prices in Europe started in spring when the average price on the spot market by the TTF index ranged from $250 to $300 per thousand cubic meters. However, at the end of summer the day-ahead contract price was already over $600 and in early October it passed the $1000 threshold. In December, quotations doubled.
The historic maximum in the futures market – $2190 per thousand cubic meters – was reached on December 21. Such unprecedented price levels have never been seen in the history of gas hubs in Europe.
Sergei Kolobanov, deputy head of the Economics of Fuel and Energy Sectors at the Center for Strategic Research, believes that gas prices will fall sharply starting in April and could reach some parity with other fuels by mid-summer.
“With oil prices remaining at $60-80 per barrel, the ‘fair’ price of gas should come down to a range of $500-200 per thousand cubic meters”, – he specifies.
Dmitriy Marinchenko, director of Fitch’s Natural Resources and Commodities group, said it was too early to draw a conclusion about the medium-term dynamics of prices, focusing only on last year’s anomalies.
“For the time being, we assume that within 3-5 years, prices may fall below $200”, – he said.
Senior consultant of Vygon Consulting Ekaterina Kolbikova said that due to passing the peak of liquefied natural gas production capacity commissioning the prices will be by 2025 much higher than in the previous four years, in the corridor of $360-540 per thousand cubic meters.
Experts attribute the unprecedented growth of gas prices in the European Union to the following factors: low level of filling of European underground storage facilities, supply limitations from major suppliers and high demand for liquefied natural gas in Asia.
The price is now additionally affected by weather conditions and the uncertainty regarding the start-up of Nord Stream 2, which has been ready for operation for some time, with both strings filled with technical gas.