European gas markets: Post-war outlook
The article was written by Dr. Carole Nakhle, CEO of Crystol Energy and Vice President of the Arab Energy Club, and first published by Geopolitical Intelligence Services
In 2022, Europe witnessed a perilous energy crisis. Natural gas prices soared, hitting a historic high of more than 330 euros per megawatt hour in August 2022. The main culprit was tight gas supplies following Russia’s invasion of Ukraine, coinciding with several disruptions affecting alternatives to natural gas: low wind-generation capacity, nuclear-power outages in France, drought affecting hydropower generation in Norway and curtailed coal transportation in Germany. These problems limited the scope for substitution.
Fast forward to over a year later, and European energy markets seem to have gone from scarcity to plenty. Gas prices have hovered between 22 and 30 euros per megawatt hour since the beginning of this year. The crippling 2022 crisis seems to have been forgotten by many, even though the war in Ukraine is still ongoing – along with rising tensions in the Middle East and Houthi militant attacks on Red Sea shipping, which threaten the liquefied natural gas (LNG) trade.
Title Transfer Facility (TTF) gas price
Several developments have led to this drastic change, chief among them the evolution of the gas trade and its globalization through LNG. This trend is unlikely to be reversed. The European Union has attracted LNG cargoes to fill the gap left by the loss of Russian pipeline gas, resolving a major crisis within a relatively short period.
