European Natural Gas Markets Now Connected Globally: Panel

SEATTLE (Oil Monster): The European wholesale market for natural gas has become part of a wider global market for the fuel, and a key driver within it, participants in a panel discussion said at the S&P Global Platts European gas and LNG conference Nov. 23.

During a discussion on the current state of play within Europe’s turbulent markets, the panel’s consensus was that high prices and volatility were the result of a myriad of factors, and were global in nature.

“Europe has become a proper gas market, driven by fundamentals and connected to the rest of the world,” Franco Magnani, Head of Equity Valorization for Gas and LNG at Eni, said. “So what happens in Europe is largely driven by what happens in Asia, and what happens in the US.”

Glenn Kviljo, head of gas trading at Equinor said significant LNG demand “took the market by surprise, especially considering the heating cycle in Asia.”

“What we have seen in the recovery was that demand has a much quicker recovery than output,” Kviljo said. “With the drawing down of stocks, and increased volatility in the power market, we get what we see now: a hand-to-mouth market.”

Fellow panelist Annie Krist, CEO of Gasterra agreed: “We are in a global market, and perhaps even Europe is the balancing part of this global market.”

“It is a tightness due to physical constraints, a consequence of limited renewable power, and of economic rebound,” Krist said. “But if we look at these developments in isolation, we fail to see the interrelated nature of the current state of play.”

Completing the panel and the consensus was Uniper’s vice-president of market analytics Gregor Pett, who concurred with the other participants regarding the interconnectivity of global markets, and attributed the market environment not to one single cause, but to a “complex combination of factors.”

“We have been taking gas storage as a given, and [taking it for granted] that LNG will do the trick with only pipelines, or pipelines will do the trick with only LNG,” Pett said. “The lesson is we need them all, and we need a combination of all of them, with proper portfolio management to balance them out.”

Courtesy: www.hellenicshippingnews.com