HomeMediaLatest News Why is gas becoming more expensive in Europe, and who will benefit from it

Why is gas becoming more expensive in Europe, and who will benefit from it

15 September 2021

Salikhov Marcel R. President, Principal Director on Economic Studies, Head of the Economic Department

Marcel Salikhov, President of the Institute for Energy and Finance, gave a comment to the BBC Russian service on the situation in the European gas market.

Exchange prices for gas in Europe rose to almost $ 970 per thousand cubic meters on Wednesday. Prices are now approaching their all-time highs in March 2018 - then gas rose in price against the backdrop of abnormal cold weather in European countries.

Europe was more active than usual in emptying gas storage during unusually long cold weather last winter, Marcel Salikhov, president of the Institute of Energy and Finance, explains. In the summer, gas reserves were not sufficiently replenished due to high prices for it, the economist explains.

Marcel Salikhov believes that Gazprom can use the situation with half-empty storage facilities and rising gas prices as an argument in its favor in a dialogue with the EU on the occupancy rate of Nord Stream 2.

He also believes that the next six months "will be good enough for Gazprom," as prices will remain quite high.

“According to our estimates, at prices of $ 700-600, Gazprom will have an average annual price of $ 400 over the next few months. Last year it was $ 120 per 1,000 cubic meters. It’s plus $ 35-40 b to revenue compared to last year," Salikhov says.

In his opinion, since the current level of gas prices in Europe has little to do with fundamental indicators, it is very unstable.

"Most likely, everything will end later with a sharp collapse. Now, with such prices, any alternatives to gas are more economically attractive. If gas can be replaced somewhere, then at such prices it is necessary to replace it everywhere," the expert notes.

According to Marcel Salikhov, a collapse in prices may occur with the launch of Nord Stream-2. However, prices are unlikely to return to last year's levels in the coming months.

 

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