Page 48 - Nigeriaone mag 3 edition en

Gas prices finally falling in Europe

Gas meter, illustrative image

Natural gas prices in Europe have been falling for several days as the early start of summer and abundant LNG
supply have eased supply concerns. In fact, natural gas prices in Europe have been falling for weeks now, with
demand falling while supply remaining strong thanks to LNG and Gazprom's continued deliveries via Ukraine
and the Nord Stream 1 pipeline.
Europe became the largest buyer of U.S. LNG as it seeks to reduce its dependence on Russian gas even before
Russia invaded Ukraine. The result of that was an increase not only in gas prices, but also in LNG tanker rates,
which recently hit a 10-year high. Although demand is dropping, gas prices in Europe remain quite high as
buyers seek to fill their reserves for the summer. Some of them may be more desadvantaged than others, as
Gazprom has suspended deliveries to European countries like Poland, Bulgaria, the Netherlands and Denmark
because they refuse to pay for gas in rubles.
However, most of the major gas buyers who supply European countries with natural gas from Gazprom have
accepted the latter's payment terms, thus ensuring continuous supply of gas. According to some analysts,
Gazprom is not expected to discontinue supplies to other European buyers at this time.
With a perspective to reduce its imports of Russian gas, the European Union is reluctant to impose a total
embargo on the commodity. The European Commission has recently begun to consider capping the price of
imported Russian gas.
The main objective here is to reduce the European Union's gas bill on the one hand, and on the other, to reduce
proceeds from Russian natural gas sales as retaliation for Moscow's invasion of Ukraine.
However, Russia has warned its supplies of natural gas to the west could still be cut. Nevertheless, The European
Union has already been preparing for this since it imposed sanctions on Russia in February following the
invasion.
“Should Russian gas supplies be withheld this winter, the International Monetary Fund warned of a projected
4.8% contraction of Germany's GDP,” EBW Analytics highlighted in a paper release.

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