European gas sets records in August without a solution to the yoke of Russia and Algeria

Los nerves in the natural gas markets in Europe rises again one more day according to the contingency plans to supply the supply of Russia to countries like Germany, Italia o Eastern Europe they do not provide visibility and uncertainty rises in the face of winter. The tension is reproduced in full time of construction of strategic reserves in the Old Continent ahead of winter due to the lack of real alternatives to the precious fluid, except for the shift towards Coal and the Petroleum. The renegotiation of the annual supply agreements that have updating clauses and that are causing serious friction in the operators is also trading on the rise.

Los natural gas futures TTF of the hub of rotterdam soar this Monday above 220 euros per MWh, a 7% advance compared to Friday’s close. It is the fourth consecutive session above the barrier of 200 euros, something that has never happened and consolidates its price in a record area. Despite the fact that these are prices never reached at the end of the session, gas is still far from the intraday milestone of 345 euros set on March 7.

The most relevant quote, however, is the year-on-year comparison since last year at this time barely 28 euros per MW were paidthere is this same market, which acts as a central European reference. What if price increase of 700% begins to be applied in supplies for winter. Germany has already approved a surcharge for winter gaswhich will come into force in October for German households and businesses in 2.4 euro cents per KWh, that is, about 24 euros per MWh.

The government of Olaf Scholz it handled a range of 1.5 to 5 cents (15 to 50 euros/MWh) that has finally remained in the middle term. This new tax is intended to compensate gas companies for the increase in the price of gas. Until now, the majority of German consumers had remained protected from the historical increase in prices. berlin The reduction or elimination of VAT is even being considered to neutralize the negative effects that this jump in prices will have for households and companies.

Conversations of Spain and Algeria

While this is happening in Europe, spain it continues to enjoy a somewhat more benign scenario in terms of reference prices when compared to the European TTF due to the application of the Iberian exception. The Ricea platform that measures entry prices for Spain and Portugal, recorded last Friday a price of 143 euros per MWh in the daily auction of this market, 35% cheaper than in Rotterdam. In year-on-year terms, the increase is close to 400%, or five times more.

The price differences represent a fundamental element of friction between Spain and Algeria, the largest supplier of gas until last December. The positions have also distanced themselves with the three-way diplomatic crisis between the two countries and Morocco. In August 2021, the renegotiation of the supply for the winter ended with the closure of the Maghreb-Europe gas pipeline, in force since November 1.

Abdelmadjid Tebboune, President of Algeria

The decision has almost halved the flow of gas in the first half of 2022. The Spanish Government relied on the increase in supply through the Medgazthe other Algerian gas pipeline with Spain, and the one for methane tankers with LNG (Liquefied Natural Gas) after intense diplomatic contacts and visits by Spanish ministers to Algiers. The talks to support the Spanish naturgy in the renegotiation of the supply they did not give good results and Spain accelerated the diversification with imports from the USA, above all, and Russia, to a lesser extent.

Twelve months later, high-level officials from the governments of Algiers and Madrid have met again after the secret trip of Spanish officials to the Algerian capital The last friday. According to the Herpress newspaper, the usual Falcon 900 plane from Pedro Sanchez y Margaret Oaks landed on Friday, August 12 at 12:00 noon at an Algerian military base to begin his return six hours later to Torrejon de Ardoz.

The meeting, which has not been officially confirmed nor has its content been disclosed, is part of the tense diplomatic relations between the two countries that have led to a commercial blockade in all areas despite the privileged energy association that they maintained in the past. Medgaz, which still accounts for about 20% of the gas that reaches Spain, is operated half by Sonatrachthe Algerian state company, and a joint venture between naturgy and the American giant Blackrock. In the midst of the pulse through the gas, Italiawhich already receives Algerian gas through up to 3 gas pipelines, has renegotiated with Algeria to become the new preferred partner in Europe and thus reduce its dependence on Russia.

Just three weeks after the European Union approved its plan to reduce the gas consumption by 15% from August to spring, the goals seem more difficult to meet this summer. “With several regions experiencing scorching heatwaves, the latest data confirms increased burning of oil in power generation, especially in Europe and the Middle East, but also across Asia,” the International Energy Agency said.AIE) according to a note collected by SPGlobal.

“The looming natural gas crisis in Europe is already fueling a substantial substitution of oil for gas demand. EU members have committed to reducing their gas demand by 15% from August 2022 to March 2023. We estimate that this will increase oil consumption by approximately 300,000 barrels per day for the next six quarters“said the energy authority.

Source: LA INFORMACIÓN – Lo último by

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