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Wind turbines "inflated" gas prices

09 August 2021

Gromov Alexey I. Principal Director on Energy Studies, Head of the Energy Department

Alexey Gromov gave a detailed commentary to the internet portal oilcapital.ru on the current situation at the European gas market.

Aleksey Gromov, Principal Director on Energy Studies of the Institute for Energy and Finance, is confident that Gazprom will compensate for the shortage due to an emergency at the Gazprom Pererabotka plant and will fulfill its contractual obligations in full. “The Gazprom company values ​​its European partners. And if it does not choose its contractual obligations now, then in the future it will fully compensate for this with additional supplies,” the expert said.

The situation with the rise in prices in the EU has once again shown that Europe is not yet ready for an energy transition in favor of a sharp replacement of hydrocarbon raw materials with renewable energy sources.

“The consumption of energy carriers is not decreasing, moreover, now summer has already become the period for which local maximums of energy consumption are characteristic. Therefore, I assume that gas prices in the EU will remain at high levels at least until the beginning of September. In the future, it will be corrected, since climatic problems will return to normal and Gazprom will solve its problems. But I would not say that in the near future gas prices in the EU will decline. Because another factor is at work - the growth in gas consumption, including in the Asian markets. They are traditionally premium and now consume almost the entire volume of LNG that is produced in the world. At the same time, Europe has very few alternatives to pipeline gas supplies, including from Russia,” Gromov said.

According to him, now in Europe they are trying to accuse Gazprom of allegedly holding back gas supplies to the EU and thereby accelerating prices: “Gazprom has long-term contracts and contractual obligations under them. The concern cannot be blamed for breaching its contractual obligations."

At the same time, Alexei Gromov recalled that many are now talking about a new hydrocarbon boom. However, relative to 2020, any increase in demand for oil, gas and coal will be a boom. “This is recovery growth. In my opinion, growth will continue until the end of this year, as will high prices. In the future, prices will be adjusted and stabilized,” the expert concluded.

Gromov Alexey I. Principal Director on Energy Studies, Head of the Energy Department
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