Despite the decline in natural gas prices in Europe during the past months, and stocks reaching reassuring levels, the specter of a new crisis, similar to the one that erupted in the aftermath of the Russian invasion of Ukraine, still looms on the horizon, according to experts and analysts.
Europe’s benchmark TTF gas price fell to 24.63 euros per megawatt-hour in mid-July, the lowest since early June, and about 90 percent lower than the price in late August last year, at the height of the energy crisis.
And she says Bloomberg agency Natural gas prices in Europe are on track to record one of the largest declines in July, with the decline in industrial activity and the increase in inventories despite the high demand for gas due to the heat wave in the continent.
Prices have fallen more than 65 percent this year, even after rising in June, due to rising temperatures in parts of Europe and unexpected outages in gas supplies from Norway.
The agency indicated that the decline in demand for gas increased storage levels, which are now at 85 percent.
And she says British newspaper Financial Times Current storage capacity in the European Union is more than 80 percent, which is 20 percentage points higher than the average of the previous five years.
Analysts expected storage sites to reach 90 percent before November, the month set by the European bloc to reach this goal.
The news comes as inflation slowed in Europe thanks to a decline in energy prices, which increased by 6.1 percent in July, after a decline of 5.6 percent in June, according to AFP.
The Eurostat agency of the European Union stated that growth in the region reached 0.3 percent during the period between April and June, after recording zero growth in the first three months of the year.
For his part, the economist Hashem Akl warned, in statements to Al-Hurra website, against believing that Europe was no longer facing a gas crisis, saying that it had only gone through a warm winter, so the Europeans did not need to reach 90 percent storage capacity to ensure the availability of supplies.
The price of natural gas in Europe at the height of the supply crisis reached more than $40 per million thermal units, but it fell to about $9, then rose slightly to $12 due to rising temperatures.
In light of the decline in prices, the net income of the French oil company Total Energies declined in the second quarter of the year, on the back of lower natural gas prices and refining profit margins in Europe, amid a state of calm in the energy markets, according to Reuters.
Data from the Russian Ministry of Finance showed that the country’s budget revenues from oil and gas fell 47 percent to 3.38 trillion rubles ($37.4 billion) in the first half of the year, compared to the same period last year, due to the decline in tax revenues as a result of low prices and shrinking volumes. the sales.
Revenues from oil and gas sales are crucial to Russia’s commodity-focused economy and are needed to fund what it describes as a “special military operation” in Ukraine.
Russian energy revenues were affected by the price ceiling imposed by the West on Russian oil, and the closure of the “Nord Stream” pipeline to transport gas to Europe, a line that was blown up last September.
Russia’s budget deficit reached $42 billion in the first five months of the year, which is already 17 percent more than expected for the whole of 2023.
The Ministry of Finance expects oil and gas revenues to decline this year by 23 percent to 8.94 trillion rubles, while it expects the budget deficit to reach approximately 3 trillion rubles, or the equivalent of 2 percent of GDP, according to Reuters.
Winter fears
Despite the positive data on the continent of Europe, the International Energy Agency warned of a shortage in gas supplies in the event of a “combination of a cold winter, a complete stoppage of Russian pipeline gas, and a decrease in the availability of liquefied natural gas,” which it said may mean that the continent will not It will only have storage levels of 20 percent, by next April, a level that would threaten to disrupt supplies.
The general manager of the French giant Total Energy, Patrick Pouyanne, did not completely rule out the possibility that Europe would run out of gas next winter, stressing the weakness of European storage capacities and import costs, according to AFP.
“In terms of gas, yes, the tanks will be full” in October, Bojani said during a round table at an economic forum in Aix-en-Provence, southern France, but “if the winter is cold in Europe,” the European continent’s storage capacities will not be sufficient to respond to demand. Gas from European consumers throughout the season, he said.
This does not necessarily mean that the Europeans will be short of gas, but the imports needed to meet the demand will be very expensive, Bouianni warned.
The Europeans have become very dependent on American liquefied natural gas since the Russian supplies were cut off, and they also depended on political developments in the United States, where the next presidential elections are scheduled to take place in 2024.
Bojani warned that if the Republicans opposed to the current Democratic President, Joe Biden, decided to “stop (liquefied natural gas) exports, there would be a danger related to the regime.”
Hashim Akl says that with the increase in demand for gas, Europe will face the risk of relying on the quantities of gas that it comes from countries such as the United States, Egypt, Nigeria, Algeria and Qatar, which may not be sufficient to reach 90 percent capacity.
And Bloomberg explains that the continent’s major industrial consumers are reluctant to run their businesses at full strength after the record increase in energy costs last year prompted them to reduce production.
The agency says that the gas market in Europe is fragile, as supply disruptions, the advent of a cold winter, or increased competition for liquefied natural gas coming from Asia may lead to higher prices.
The agency said that even if gas storage sites in Europe were filled to nearly 100 percent of their capacity before October, this “does not guarantee” market stability.
Bloomberg also points to long-running maintenance work on gas pipelines coming from Norway, which could also cause market turmoil.
Akl points out that the gas exporting countries are governed by long-term agreements that they cannot cancel in favor of new agreements with European countries, which benefited from transferring the surplus of these countries to them last year, as some ships that were heading to China, Japan and Korea turned to them, but they are in the winter. Next does not guarantee it.
Reuters indicates that the United States had diverted liquefied gas exports from Asia to Europe in the wake of the conflict in Ukraine, but it seems that it has returned it now, as Asian imports from the United States in July reached their highest level in 18 months, by about 2.34 million tons, up From 1.43 million in June, and 1.91 million in July last year, while European imports from the United States fell to 3.45 million tons in July, down from 3.88 million in June, according to Reuters.
The new warning from the Energy Agency warns of the possibility of a renewed “energy conflict” between Europe and Moscow, despite the continuous decline in prices since December, which reinforced expectations that the gas crisis in Europe is over.
Akl said, “There is no surplus of gas in the world. There is a shortage problem that Europe will suffer from for at least three years,” with no solutions, whether by traditional methods or renewable energy sources.
The economist pointed out that the continent has already adapted to the gas crisis and legalized its uses in public life.
2023-07-31 19:07:45
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