According to Fitch Ratings’ report titled “Europe’s Worst in Gas Crisis”, the provision of liquefied natural gas (LNG) and interconnected infrastructure stands out as the main criteria for Europe’s long-term gas supply.
Europe’s increase in LNG supply, mild weather conditions and steps to reduce demand prevented the worst scenario in the power crisis.
Depending on the record-breaking gas prices, the gas demand of the European Union (EU) decreased by 10 percent in 2022, while the decrease in demand is expected to continue this year and reach 15 percent. Decreases in demand due to high prices vary from country to country.
Supply shortage will continue
It is expected to defend the value of LNG, which is the main alternative source in reducing dependence on Russian gas in the energy crisis, and the supply shortage in the global LNG market is expected to continue.
Although it is predicted that LNG demand will increase with the abolition of China’s “zero Kovid” policy and this situation will increase the congestion in global LNG supply, it is claimed that Europe can provide sufficient LNG purchase.
Fitch Ratings predicts that gas prices in Europe will remain “very volatile” for a while and remain at higher levels than before the war.
In this context, natural gas prices will only become normalized in a sustainable manner starting from 2025, with the creation of LNG and interconnected infrastructure.
A downward trend was seen
At TTF, the Netherlands-based virtual natural gas trading point with the deepest depth in Europe, the price of one megawatt-hour of natural gas is trading at 58 euros in contracts with a maturity date of March 2023.
Prices rose to 342.8 euros per megawatt-hour in August 2022 after the war.
Prices in TTF had entered a downward trend as of December 2022 due to mild weather conditions and high occupancy rates in natural gas warehouses.
