Gas prices in Europe approached its cost in Russia

the great news about the prices of oil are lost of posts about the crisis in the gas market. Although problems on it due to the decline in demand did not arise smaller. In addition, there is no such instrument as OPEC+, which would be able to unite the country that is exporting gas to joint efforts to try to balance the demand and supply of “blue fuel” in the world.

On the main spot (trade with fast shipment of goods) the Playground of Europe TTF in the Netherlands, the cost of gas for the week fell to 66.8 76.1 dollars per thousand cubic meters. But the most significant situation in the UK, where the spot price of “blue fuel” with the shipment of goods this week decreased to 42.27 USD per thousand cubic meters, and with a shipment next week to – of 36.85 USD. And this is even lower than the rates in many regions of our country.

Spot prices pulling down the cost of gas under long-term contracts that are subject to a large part of exports, including from Russia. Naturally, in this situation the question arises about the feasibility of increasing gas production capacity. “The situation on the gas markets is now extremely unfavorable. The investment decision is transferred for later, moreover, reduced capital investment program, where possible and will not lead to the destruction of already committed investment,” – said the Deputy head of the national energy security Fund Alexei Grivach. He said that in the medium term, mankind will still need more gas for purification of the energy balance and sustain economic growth.

the Russian company announced on the suspension of new gas production projects. In addition, “Gazprom” has finished nearly all of the larger construction “Power of Siberia”, “Turkish stream” and “Nord stream-2”, despite ongoing difficulties, is likely to be completed this year. In such cases the company could afford to continue to expand the resource base by investing in new projects. Problems can arise only in the case that gas demand will not recover for a long time and then it will be unclear where to store additional volumes of “blue fuel”.

Before the start of the pandemic coronavirus in the world gradually increase the share of gas consumption in the energy sector was considered to be already taken for granted. Now all cards are mixed up, but in spite of this, gas have a greater potential for demand growth than oil, compared to pre-crisis (before the epidemic) level. This, of course, will take time. Lowest prices on the market, on the one hand, will contribute to the increase in demand. But to slow down the process, there are limitations associated with the need to invest in infrastructure consumption, in conditions of a contraction is problematic. “Prices are not��sberna will go up, as the current level does not cover the costs of most producers of gas. But this is unlikely to happen before the end of large-scale quarantine in the world”, – says Alexey Grivach.

the Fall in demand and, as a consequence, falling prices for pipeline gas, but also liquefied natural gas (LNG). The product, which a year ago predicted a doubling of global consumption by 2030, now sometimes is not in demand even at the lowest prices. Reuters April 23 reported that buyers in Asia and Europe have canceled the loading of about 20 cargoes of LNG from the USA with delivery in June.

At this, despite the negative dynamics of demand for liquefied natural gas power production in 2020 will increase. Only in the US is expected to put several new lines of LNG 17.5-19 million tons. Projects likely to be completed on time, despite not the most favorable market conditions, since the major investments have been made. This will further intensify competition in the market which and without that big.

“now many of the LNG projects generate billions of dollars in losses that the participants of the supply chain all the more difficult to bear,” – said Alexey Grivach. In his opinion, if in the near future there will be a recovery in demand, the LNG producers will have to reduce supply, for example, through lengthy unscheduled repairs of facilities.