The big news on the gas market this week is that the Dutch GasTerra no longer receives gas from the Russian Gazprom. The market reaction to that decision was limited. Are market parties reacting in a hypothermic way or are the consequences of the loss of Russian deliveries not too bad?
The natural gas listing on the TTF was cautiously on the rise last week. On Thursday, May 26, the price closed at €85,97 per MWh. On Monday, May 30, it rose to €87,99 per MWh and yesterday to €94 per MWh. Just as quickly as the price rose, the decline has started again today. At the time of writing this article, the TTF stands at €87,05 per MWh.
As mentioned earlier, the cause behind the spike in the gas price yesterday is the stoppage of Russian gas that came into effect yesterday because the Dutch GasTerra refuses to pay in rubles. Gazprom is expected to supply approximately 1 billion cubic meters by October 2022, 2 (the date the current contract expires). According to GasTerra, the supply stop will not cause any immediate problems. GasTerra has anticipated possible supply problems by purchasing gas elsewhere. Gas from Russia accounts for about 15% of Dutch gas demand. About 5% of this comes from the contract between GasTerra and Gazprom. The remaining 10% is purchased (indirectly) from Gazprom via other parties.
Stock build-up
The period up to and including September is mainly used to build up stock for the winter. According to experts, the 2 billion cubic meters may cause a delay in filling the gas storage, but there is still enough time to take additional measures. The current filling level is approximately 40% and that must have increased to at least 80% before winter sets in. The lukewarm response of Rob Jetten, Minister for Climate and Energy (D66) to the stoppage of Russian gas is surprising to some experts. According to Jetten, filling the gas storage facilities is becoming more difficult due to the loss of supplies from Gazprom. The minister hopes that the storage facilities will be filled in time with LNG from other countries. Extracting extra gas from Groningen is mentioned as the very last resort.
Jetten does not yet want to take immediate measures to accelerate the build-up of the gas stock. The minister promises to provide more clarity soon. Saving on gas could be achieved relatively easily, for example by generating more electricity with coal-fired power stations instead of gas-fired power stations. This is currently not possible because it has been laid down by law that coal-fired power stations may operate at a maximum of 35% of their capacity in order to limit CO20 emissions. The wait-and-see attitude of the ministry worries some energy experts. Now you can still take measures and adjust. If you just keep waiting, you will soon be faced with fait accomplis in the winter, according to analysts.