The gas market is calming down somewhat after a very hectic start to the week. Current stocks in the EU are sufficient for this winter. Russia remains the main supplier with the current deeply disturbed relations, that is something that European leaders want to get rid of as soon as possible.
The gas price on the TTF futures market reached an unprecedented level on Monday, March 7. During the trading day a price of €345 per MWh was achieved. The day closed significantly lower, at €227,20 per MWh. For comparison: last year the price on the same day was €16,15 per MWh. This made gas fourteen times more expensive than one year earlier. The price has now fallen considerably, to €154,44 per MWh. That is still an increase of approximately 800% compared to the same period last year.
The extreme price increase is mainly caused by the impending sanctions, which may involve the introduction of a (partial) ban on the import of Russian gas. The United States and the United Kingdom announce that they will no longer import energy from Russia. The United States can take this step more easily than the European Union. The country has extensive oil and gas resources of its own. Although Russia is an important supplier of gas and (even more so) oil, the proportions and degree of import dependence differ considerably from the European Union.
Energy (in)dependent
The European Union is in a difficult position due to its dependence on Russia. Large quantities of LNG have been purchased on the world market in recent weeks and this is paying off. Ursula von der Leyen announced on Tuesday, March 8, that there is enough gas for the rest of this winter. The problems have not been solved in the longer term. Gas supplies must be replenished in the coming months to ensure there is enough gas available next winter. The European Commission is therefore preparing legislation stating that storage facilities must be at least 90% full on October 1 of each year. That is a first step to prevent price increases as we have seen recently. But this does not reduce dependence on Russian gas.
To reduce energy dependence, the European Commission wants to advance the climate measures laid down in 'fit for 55'. The goal was to use 2030% less natural gas by 30. The Commission now wants to achieve this in one year. To this end, the production of biogas and green hydrogen must be significantly increased and the consumption of fossil fuels in homes, buildings, industry and the energy supply must be significantly reduced. In addition, the Commission wants to further reduce dependence on Russia by sourcing more LNG and natural gas from other countries.
Limits on capacity
A logical choice is to further increase imports from Norway. Norway already has several pipelines to Europe and work is currently underway on an additional pipeline that runs (via Denmark) to Poland. This Baltic pipeline should be ready in October or November. The Prime Minister of Norway, Jonas Gahr Stoere, warned during a visit to Copenhagen that the additional pipeline does not automatically mean that more gas can be exported to the European Union. "The Norwegian companies that manage the pipelines do everything they can to utilize maximum capacity. The Baltic pipeline does ensure a better distribution towards Europe, but does not mean that more gas can automatically be supplied"