The wholesale price of gas for the European market fell on Tuesday, as attention focused on the high level of inventories in Europe. The price of the key gas futures contract for October delivery at the Title Transfer Facility (TTF) virtual trading hub in the Netherlands was losing roughly 12 percent to 217 euros (about 5,300 CZK) per megawatt hour (MWh) shortly after noon. However, it still remains many times higher than a year ago, when it hovered around 30 euros per MWh.
Gas prices in Europe are being pushed up this year by supply cuts from Russia. The situation surrounding Russian gas supplies became more complicated when Russia launched an attack on Ukraine in February and the European Union enacted a series of anti-Russian sanctions in retaliation. On Monday, the price of gas rose significantly in response to the suspension of supplies through the Nord Stream 1 gas pipeline.
Last week, the European Union met its goal of filling 80 percent of its gas reservoirs by November ahead of schedule. According to data from Gas Infrastructure Europe (GIE), storage tanks in the EU were almost 82 percent full on Sunday. In Germany, which is the largest consumer of gas in Europe, the storage capacity was more than 86 percent, in the Czech Republic it was approximately 82.5 percent.
According to GIE data, neighboring Poland’s reservoirs are almost 100 percent full, and Slovakia is close to 80 percent. The worst situation in the European Union is Latvia, where the reservoirs are filled to about 50 percent. Ukrainian reservoirs are almost 28 percent full.
Russian gas company Gazprom said last week that it will keep the Nord Stream 1 gas pipeline out of service until defects found during maintenance are fixed. Nord Stream 1 transports gas from Russia to Germany along the bottom of the Baltic Sea and is the main route for Russian gas supplies to the European Union. On Monday, Kremlin spokesman Dmitry Peskov said Nord Stream 1 would remain out of service until the West lifted anti-Russian sanctions imposed after Russian troops invaded Ukraine.
Ratings agency Fitch said the pipeline’s supply disruption came four months earlier than it had expected. However, she added that Europe had prepared for this eventuality. EU steps including increasing alternative gas supplies and a planned 15 percent reduction in consumption should help avert acute gas shortages, she said. However, the agency noted that there are many uncertainties surrounding the winter gas market in Europe, including how cold the winter will be, how high liquefied natural gas (LNG) supplies will be and how the war in Ukraine will develop.
Europe is preparing a joint solution to energy prices
High energy prices will be addressed by the European Union’s energy ministers at an extraordinary council convened by the Czechia as the presiding country for this Friday. Industry Minister Jozef Síkela (STAN) has already stated that there are two different plans in play.
One envisages separating the price of gas from the price of the final power plant, which determines electricity prices. “This means that the high gas prices, which are the subject of the energy war, should not affect electricity prices,” Síkela said on Tuesday.
“We should primarily look for a solution in the cause, and that is in the gas market, not the electricity market. The point is to separate the price of gas and electricity. If it were possible to set the price of gas on the European market in the coming weeks, it would be a huge victory for the European Union,” said Jiří Feist, who has managed both ČEZ and ČEPS and is currently in charge of strategy on the board of EP Power Europe, in an interview with SZ Byznys on Monday. , the production part of Daniel Křetínský’s Energy and Industry Holding.
“The situation must be resolved within weeks. Then comes the beginning of next year and securing energy for the next period can be difficult,” he added.
Regardless of how the European negotiations turn out, the Czechia is also preparing its own solution. “I can confirm that negotiations are underway and measures are being prepared to ensure the stability of energy prices in the Czech Republic for all end users, both households, companies and the public sector,” said Síkela.
According to him, the negotiations are at a very advanced stage and only the details are being resolved. The minister added that the measures would probably be individual for each sector.