The rise in gas and coal prices in the EU is explained by several factors, noticed in the comment ABF "Economics today» Deputy Director General of the National Energy Institute Alexander Frolov.
Deputy Prime Minister of the Russian Federation Alexander Novak said, that the Russian Federation resumed export of coal to Europe.
Cold snap leads to loading of coal-fired power plants in Europe. Previously, supplies were unprofitable, but the last cold weeks of temperatures have brought prices back to an acceptable level.
Spain is a good example: in this warm country, the temperature at night dropped to minus 34 degrees.
Prices for gas and coal have increased in the EU
Russian coal exports to Europe increased by about 20% due to price increases to 70 dollars per ton. The main buyers of our coal raw materials are Germany, South Korea, Japan, Netherlands and Poland.
The situation in Germany is indicative. The accident at the Japanese nuclear power plant in Fukushima forced the Germans to abandon nuclear generation, which is why the consumption of coal in Germany has increased. Renewable energy sources (renewable), At first, too expensive, and secondly, unreliable due to weather dependence, therefore, the main load was taken by carbons - gas and coal.
Along with coal in the EU, coal prices have increased: yesterday spot prices on the Dutch TTF hub rose by 18% and reached 335 dollars per thousand cubic meters of gas. The last time such quotes were 27 September 2018 of the year
“On local exchanges, the gas price rose to 1000 dollars per thousand cubic meters. This happened due to events in Spain, where ultra-low temperatures for this region were observed ", – states Frolov.
The European average also rose: this is due not only to the temperature, but also the lack of excess resources.
“In the EU today there is a great demand and a small supply. This removes the question of the consequences of the coronavirus pandemic for the European gas market.. Virus-Virus, but houses need to be heated ", – Frolov concludes.
Much of Europe's heating is gas powered. If you take the situation 2020 of the year, then there with the demand for raw materials everything is ambiguous. For this indicator, as power generation, gas consumption increased, and this speaks of good prospects for raw materials in the EU.
“Coal consumption has been declining, for various reasons, the share of renewable energy sources in the energy balance has increased, but gas demand has risen despite coronavirus infection, the fall of the European economy and large-scale problems on the continent ", – Frolov sums up.
The conjuncture is in favor of Russia
AT 2019 the European economy experienced an oversupply of gas caused by LNG. Then the production of this raw material in the world reached its peak indicators., which collapsed gas prices like Europe, so in Asia.
“The European market was influenced by two factors: At first, warm winter, which has reduced physical consumption on the continent, and secondly, active filling of UGS storage facilities due to the situation with Ukrainian transit ", – states Frolov.
Then European companies were afraid, that Russia and Ukraine will not agree on a new transit contract, and Gazprom will not be able to implement export agreements. Nord Stream 2 and Balkan Stream lagged behind in terms of timing, first because of American pressure, and the second because of the sabotage by the Bulgarian side of the construction of the interconnector to Serbia.
“This is what brought down gas prices on the European market.: they fell before any quarantines, since at the beginning of the pandemic, the gas price in the European Union was at the level 100 dollars per thousand cubic meters ", – Frolov concludes.
Then China opened the domestic market for US LNG and showed an increase in demand for raw materials.. This instantly led to an increase in the supply of raw materials to the South-East and the withdrawal of supply from Europe..
"AT 2019 the year saw a decrease in gas prices in all markets, and 2020 year increased demand in Southeast Asia. The price rose there and the LNG suppliers went there. The process began in the second half of the year and turned into an increase in gas prices in the EU ", – Frolov sums up.
Not much at first, but the price gradually left the May-June 40 dollars, and in Asia, the cost of gas grew much faster. Today gas prices there exceed European ones by almost two times..
“There is a situation in the EU, influencing the entire heating period. There is no oversupply, but there is a stable demand for energy resources, which even led to an increase in coal prices ", – states Frolov.
Average demand for all types of energy in the EU in the winter will grow significantly, they will definitely be higher, than in 2018-2019 and 2019-2020 years, if only due to a change in the energy balance in Europe.
“It’s not only that, that the past two winters have been mild winters, but also successful overcoming of the situation with the Ukrainian contract. Consumers were afraid, that it will not be and because of this we have accumulated reserves ", – Frolov concludes.
These reserves had a negative impact on gas demand in the European Union and on price quotations.
“The EU was practically 100% filled gas storage, that is why Gazprom is not strenuously delivering raw materials to Europe today., but creates conditions for spending European surpluses ", – Frolov sums up.
The overall situation plays in favor of the interests of Russian energy exports.
Dmitry Sikorski
