S&P Platts in Arabia: Gas prices could remain high until 2024

In global gas markets, European gas stocks are known to play a pivotal role. It is the weighing egg that maintains its balance, sometimes absorbs stocks in excess, at other times it is taken from its warehouse to fill the shortage in this or that market.

Gas prices today in Europe are at the level record higher for this time of year, by raising electricity and heating prices in the old continent, which prompted, for example, the Energy Regulatory Authority in Britain recently to announce plans to raise the ceiling on electricity prices by more than 10% after this general.

At the same time, European gas stocks, in particularly in the northwest of the continent, they are at their lowest levels for this time of year for over a decade.

It appears that replenishing those stocks before demand increases in the coming winter could be difficult.

Flows of Russian gas pipelines to Europe remain below expectations. Some wonder if Russia is not in able to increase its production to the current volume required, or whether it will delay this increase until the start of operations of the Nord Stream 2 pipeline by the end of the year, which connects it directly to Germany.

On the other hand, the growing demand in Asia is attracting the majority of LNG shipments beyond the reach of the European market.

At the same time, many medium-sized gas producers in all over the world suffer from various difficulties that limit their ability to increase their gas production to meet this growing demand.

All of these factors, when accompanied by other events during the upcoming winter season, could necessarily mean sharp increases in gas prices in all markets. Some of these events include a greater than usual drop in temperatures or disruptions in gas production here and there, especially on the American Gulf coast due to hurricanes, as well as any delay in the operation of the Northern Flow Line 2.

two shots

Samer Moses, director of global liquefied gas analysis at S&P Global Platts, says the intense convergence between supply and demand in the gas market began a year ago, where scarce gas reserves at the time pushed Asia to attracting most of the world’s gas. supplies to it, which led to the withdrawal of European gas stocks.

As for the second shot, it came right after, in how much Europe has seen a colder-than-usual winter beyond its protracted period, and this has supported continued gas demand for a longer period of time than usual and reduced European gas stock levels which had been withdrawn The economic improvement which led to an increase in gas consumption in China and in some areas of Asia, according to Samer.

Asia

Samer explained to Al Arabiya that these factors increased Asian demand for liquefied gas, which contributed to the withdrawal from European stocks.

He pointed out that what is currently happening in the rise in gas prices is more related to supply, in how much there are disruptions in the supply of gas globally, as well as obstacles in the production of gas by some producers.

He claimed that in Europe questions arise about the volume of Russian gas flows through pipelines and the ability of Russians to increase their supplies in Europe.

He continued, “All of these factors have contributed to significantly reducing the gap between supply and demand in the global gas market, a situation that we expect to continue in the next period.”

He continued: “Asian demand is currently strong. There is a lot of talk about Chinese demand. South Korea is driving the growth of gas imports. in Asia, due to the weather conditions and the need to refill its fields “.

high prices

He explained that the prices are now very high, in how much the JKM Platts Index is at $ 17, and I expect it to stay above $ 10 through 2024, indicating that these levels will continue until a new supply wave arrives between 2024 and 2025.

He predicts liquefied gas shipping costs will rise to $ 100,000 next winter, and he doesn’t expect a gas supply crisis unless in case of major accidents.