BAKU, Azerbaijan, April 30. In Europe, gas prices will remain elevated as the EU pushes to reduce its imports of Russian gas by two-thirds by end-2022, Trend reports with reference to the UK-based Capital Economics research and consulting company.
The company analysts believe that alternative sources of supply will be more expensive.
“Europe’s LNG imports will rise, which will result in higher spot LNG prices for longer. It will also have the knock-on effect of raising US domestic gas prices, as the US exports record amounts of LNG to Europe. That said, constraints on LNG export capacity in the US will keep prices much lower than in Europe and Asia,” Capital Economics said in its report.
Moreover, between now and the end of the year, there is a risk of prices going even higher than the company currently forecasts depending on whether EU countries agree to Russia’s demand to pay for gas in rubles.
“If other EU countries join Poland and Bulgaria in refusing to pay in rubles, then the EU’s shift away from Russian gas would have to go into overdrive in order to avoid power rationing. In the more medium term, it looks as though the war in Ukraine will result in a structural change in the global gas market, with permanently lower Russian exports (and production) and higher US LNG exports. As a result, we have raised all our price forecasts through to 2025 compared to our last Outlook, as have market participants, judging from changes in futures curves,” the report reads.