Alexey Belogoryev, Deputy Principal Director on Energy Studies of the Institute for Energy and Finance, commented to Forbes on the current state and prospects for agreeing on a "price ceiling" for gas between the EU countries.
The key issue remains the level at which the ceiling will be set, Alexey Belogoryev says. He recalls that prices above €275 per MWh in 2022 were recorded only for four days, above €200 for 23 days, and above €160 for more than three consecutive months, from July 2 to October 6.
Considering that among the EU countries there are both staunch supporters and no less staunch opponents of interference in the market pricing of gas, a compromise between them will in any case be forced and imposed on some of them, Belogoriev notes.
“Therefore, €150-160 seems to be the most reasonable level for supporters of the price ceiling,” the analyst argues. - This is still an extremely high level of prices, but for the ideological opponents of the ceiling, it is still too low. The probability of reaching the ceiling of €150-160 is very high, both in January-February 2023 and in the summer of 2023.”
In general, in 2023, according to the expert, the gas balance in the EU market looks more certain than this year, since there will be no threat of a sudden reduction in large volumes of pipeline imports, which created the panic that lasted from May to September. “The main risks will be associated with the sufficiency of LNG supply, which is determined by price competitiveness compared to Asian consumers, and demand dynamics since April,” the expert says.
“It is not clear whether demand will be reduced further, or whether it will stabilize at the achieved low level, or recovery growth will begin - all options are possible.” According to the expert, a lot will depend on how much gas remains in gas storage facilities by April, when the heating season ends. Although the current dynamics of gas withdrawal is optimistic, it may be unstable, Belogoryev believes.
Subscribe for updates
and be the first to know about new publications