Destruction of demand: why gas has become cheaper in Europe

Marcel Salikhov, President of the Institute for Energy and Finance, commented to Izvestia on the reduction in gas prices in the EU.

According to Marcel Salikhov, the main reasons for the sharp decline in gas prices in the EU are related to a combination of supply and demand factors.

— In terms of supply, the global LNG market has experienced oversupply in recent months. In particular, China, contrary to expectations, continued to reduce LNG imports. In January-April 2023, LNG imports from China decreased by 16% year-on-year, to 21 million tons. At the same time, LNG imports from the EU increased by 10% over the same period. Thus, weak demand from the PRC provided opportunities to increase supplies to the EU, the interlocutor explained.

The Europeans have indeed been very good at securing supplies for the future. The level of filling of underground gas storages is now about 67%, in some countries - over 70%. For the end of May, this is almost a record. If nothing fundamentally changes, all storage facilities can be filled in the summer.

- But by the end of 2023, prices of $500-600 per thousand cubic meters can be expected. Current prices are not sustainable in the long term, as the EU will need to secure LNG supplies and compete for them with other importers, primarily in Asia, the specialist said.