Blue fuel prices rise due to increased demand, expensive quotas for thermal power plants and windlessness in the North Sea, explained by Brussels
Europe will enter the autumn-winter season with unfilled gas storage facilities. At the moment, there is a backlog in this regard, which will not be able to catch up. This was warned by the Chairman of the Board of Gazprom Alexei Miller, quoted by TASS.
According to him, the amount of gas not currently pumped in the underground storage facilities amounts to 22.9 billion cubic meters, which, according to him, is a very large amount. “All experts from both Europe and Asia are adamant that this backlog cannot be made up, so in any case Europe will enter the autumn-winter season with a shortage of storage facilities. The only question is how much it will be.” , commented Miller.
The head of Gazprom gave an example with such a season last season, during which EU countries used 66 billion cubic meters of gas from their storage facilities due to the colder winter and spring. Also this year, the filling of storage facilities with blue fuel started with a 3-week delay, which is also the reason for the current insufficient capacity.
The problem is also acknowledged by Brussels. European Commission spokeswoman Vivian Lunella said EU gas storage is currently 71% full. He added that at the same time last year this figure was 82%. However, it is possible that she made a mistake. In fact, on 17 September 2020, gas storage facilities in EU countries were filled to exactly 93.59%, according to official data. In this situation, the problem of a possible cold winter will obviously be even more serious than Brussels admits.
At the same time, however, it is possible that Lunella will not be confused. At that time last year, the calculation of EU gas reserves in underground storage facilities still included the United Kingdom. If it is deducted from the accounts, it is possible that only in the 27 Member States were they really 82% full and not over 93%.
Both Miller and Lunella also address the issue of record blue fuel prices in Europe. In their comments, both mentioned that one of the main reasons for the unprecedented rise in prices in recent months is the Green Deal and the rise in quotas for carbon emissions from electricity production. According to the head of Gazprom, the demand for gas, including Russian, in Europe will increase in the future, as natural gas is “the locomotive for solving all the challenges posed by the climate goals set by the EU.”
A similar opinion is expressed by the spokesperson of the European Commission, which is in particular responsible for the European Green Pact. It also linked the record rise in gas prices to rising electricity prices.
“Because of last year’s pandemic, electricity prices were at record lows and from this point of view the current rise in prices was expected. Their current high levels are due to a combination of several factors, but the main one is the significantly increased demand for natural gas worldwide. scale, dictated by the economic recovery: gas prices have risen to a lesser extent due to rising carbon prices in Europe, but they are also having an impact.
“Rising quota prices are stimulating additional demand for gas, which is the cleanest and most environmentally friendly fuel among traditional ones,” Lunella said.
Another factor that led to a further increase in gas demand, and hence its price, is again related to electricity. There has been almost no wind in the North Sea in recent weeks. And there are large wind farms, supplying electricity to Northwestern Europe. The spokesman for the European Commission notes that these NPPs usually produce 100-200 gigawatt-hours of electricity on average per day, but between 1 and 15 September they generated between 20 and 70 gigawatt-hours, and on 6 September a historic minimum of 4 gigawatt-hours in 24 hours was even reported. . According to Lunella, the shortage of electricity has been offset by natural gas-fired power plants, which has further increased demand and consumption, and therefore the price of natural gas.