Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to Finam.ru on the current and future dynamics of global demand and exchange prices for gas.
At the same time, the interlocutor noted that gas demand in Europe continues to decline in 2024, while growth is observed in other regions.“For the year as a whole, stock prices remain below the values of 2023 (by 15-25%, depending on the index), but this is due to the too high base of the winter of 2023. If we take the 3rd quarter, then spot prices have already exceeded the level of 2023: in Europe - by 8%, in Asia - by 4%. This is due to the shortage of LNG on the world market, which makes the overall balance of international gas trade quite tense. At the same time, price growth is restrained by a decrease in demand for LNG from Europe (-21 million tons in 9 months): if Europe consumed the same amount of LNG this year as in the 23rd, then spot prices, I think, would be much higher. In the beginning of the 4th quarter, prices should seasonally increase. Some growth is observed in the first weeks of October, but it can be explained by an increase in world oil prices - this factor does not directly affect the exchange pricing of gas: after all, there are still many long-term gas supply contracts tied to oil prices in the world. I do not think that in the coming months we will see any explosive price growth or even more so price shocks, but prices will rise, and this is normal. What will happen in the 1st quarter of 2025 is not very clear yet, since it strongly depends on weather conditions and on compliance with the schedule for commissioning new LNG capacities,” Alexey Belogoryev said.
He drew investors' attention to the fact that there are few “clean” gas companies not only in Russia, but also in the world, since they are mainly oil and gas corporations, and their profitability still depends more on the oil component.“In the absence of new price shocks, gas demand should grow steadily for another 10-15 years for sure. Gas is a relatively affordable and economically still very effective solution not only for the electric power industry and boiler houses, but also for industry, households and partly for transport. One can argue a lot about how good or bad gas is as a transition fuel to a low-carbon economy, but there is little doubt that it will remain in demand in the coming years as a substitute for coal,” Belogoryev stressed.
“In many ways, this applies now to Gazprom and partly to NOVATEK. In a global context, the main challenge for the gas business until 2030 is the expected formation of an oversupply in the LNG market. There are different estimates of when it will take shape and when it will end, but it is approximately 2026-2028. Most likely, the exchange prices for gas will drop significantly during this period. What will happen to oil-linked prices is a more complicated question. The year 2025 looks like a transition to a supply surplus, and prices may behave very volatile during the year. In relation to Gazprom, the tax burden and the dynamics of domestic regulated gas prices are also of great importance, and for NOVATEK, the timing of the start of full-fledged shipments from the first and second stages of Arctic LNG 2 under construction is of great importance,“ the expert summed up.
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