Gas in Ukraine is cheaper than before the war, but nothing is guaranteed until 2023

In the Dutch market, the benchmark natural gas price for a next-month delivery megawatt-hour (MWh) for the TTF contract in the Dutch market hovered around €73 on January 2, the lowest price since February 21, 2022. the wholesale price lost about 50% in one month and mainly fell below the summer peaks: it reached 342 euros in August 2022.

Before the war in Ukraine, gas prices started to rise, but from February 24, 2022, they really exploded. Until then, the shutdown of several gas pipelines between Europe and Russia, its first customer, mechanically increased the price as less gas came into the country. the continent

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Gazprom announced on Monday that Gazprom’s gas exports to the European Union and Switzerland will decrease by 55% in 2022. According to the calculations of energy market analyst and Sciences Po lecturer Thierry Bros, the Russian giant supplied 62 billion cubic meters of gas to Europe in 2022, against 138 billion in 2021.

Why will the price of gas fall in 2023?

Why are prices falling today? First, because Europe filled its reserves to the brim last summer, then the autumn was very mild, and finally, households and businesses voluntarily reduced their consumption: Europeans burned very little gas in their boilers.

Therefore, inventories remain very comfortable for the beginning of the year and therefore there is less need to buy gas. On Monday, the filling rate of European gas reserves was 83.3%. According to Gas Infrastructure Europe, French reserves are 84% full, while German reserves are 90% full.

The price of gas affects electricity because many European power plants burn gas to generate electricity. Wholesale electricity prices in France for delivery in 2023 fell to €240 on December 30, the lowest since April, after surpassing €1,000/MW at the end of August.

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But these changes in wholesale prices are not reflected in direct-to-consumer prices because suppliers smooth out prices, especially during this period when prices can jump from one day to the next.

Russia could tear European countries apart thanks to gas

For the future, analysts remain very cautious. “Everything depends on what Vladimir Putin decides about the flow of gas to EuropeMr Bros told AFP.It may send less, but it may send more in certain directions, hoping to divide European countries among themselves, as some academics call it. “Kremlin Uncertainty Principle” which also tests the European Union“.

As an example, he points to the possibility of exporting gas through the Russian gas pipeline through Belarus, with the hope of interested countries such as Italy or Germany. But”Unless Europe buys at least 30 billion cubic meters of Russian gas, it will be difficult to fill the reservoir this summer and prices are likely to rise.“he said, however, admitting that the continent”is better prepared“Compared to last year: in January 2022, Europe’s gas reserves were only 54% full before the conflict started.

The same uncertainty on the industrial side. “If it gets cold at the end of January, the prices will start to rise again“, warns Nicolas de Warren, president of the association that brings together France’s most energy-consuming industries (chemicals, pharmaceuticals, steel, food, etc.). He also fears competition between Europe for liquefied natural gas cargoes (LNG). eclipsed Asia”now higher than European prices“.

Why shouldn’t liquefied natural gas (LNG) stop us from reducing our energy costs?

To provide greater visibility for European industries in the future”What will be discussed now is a return to long-term gas contracts with the exporting countries, Norway, Qatar, Nigeria, possibly Iraq.“he emphasizes.

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