a Standard of the European gas market are the prices on the Dutch TTF trading platform. On 22 may, the price of gas during the day fell more than 30%. In the course of trading was established historic low – 2.35 euros per megawatt/hour, which corresponds to approximately 26,4 dollars for 1 thousand cubic meters.
Slightly higher prices on the British hub NBP – 29 dollars per thousand cubic meters (-23% for the day). The highest prices in the Austrian Baumgarten. Here for gas the next day gave about 49.7 dollars.
at the end of March, the cost of gas in Europe was at 95-100 dollars for 1 thousand cubic meters. Thus, in less than two months, the price has decreased four times
Two reasons one trend
Pressure on prices, first, having a policy is one of the countries of the Middle East. If the oil market, the biggest player is Saudi Arabia, then Qatar gas. This country is the world’s largest producer of LNG. And in the near future it intends only to increase the offer. Thus, the Qataris are ready to declare a price war.
“We are the most effective manufacturer in the world, in terms of costs and therefore can overcome market shocks.
Many producers will be forced to curtail production due to low prices, but for Qatar, this scenario is excluded”
said on 22 may, the Minister of energy and chief Executive officer of the state of Qatar Petroleum Saad Sherida al-Kaabi.
According to him, Qatar Petroleum plans to increase production by 1.5 times by 2025 (110 million tons). And almost half by 2027 (up to 126 million tons). Under future volumes have already signed contracts to build 100 LNG tankers.
The second reason is the drop in demand.
The gas market is subject to seasonal trends: consumption always goes down in the spring, which leads to higher inventory
Now, however, there is a strong additional factor is the coronavirus, and inventories accumulate faster. Storage capacity for gas in Europe as of may 22, filled to 70% vs 56% a year ago, data from the Association Gas Storage Europe.
“If market supply remains high as the filling of the storage, perhaps at some point we will see negative prices” — meet the traders.
Zero or negative price would mean that sellers of gas in Europe will be forced to give the gas for free or even pay to have it collected. A similar situation in the past has been. For example, in 2006, the negative price developed by NBP. This time, according to some experts, the worst case scenario in the negative can leave and prices on TTF.
As it relates to the Kazakhstan?
If such a situation arises, it will happen soon – after all, 30% of the tanks are empty. Another thing is that prices drop a little pleasant for exporters. Including for Kazakhstan.
According to the statistics Committee, in January-March 2020 Kazakhstan exported abroad of natural gas for a total amount of 560 million dollars. It is 124 million less than in the first quarter of 2020.
The physical volume of deliveries to four-year low. It happened due to the reduction of sales to Ukraine (almost four times to us $46.4 million) and Russia (three times — to $16.3 million).
Simultaneously, the increased sale in Switzerland — from 42.2 to 68.6 million dollars
Well, the main buyer of Kazakh gas is China. It saw more than 70% of exports (more than $400 million). This suggests that Republic is much more important than the situation in China than the Qatari expansion in Europe.
Given that China declares quick recovery of its economy, the export of gas in this direction can grow. In General, this is equalize the situation with exports. Therefore, we can say that for Kazakhstan the negative assumptions yet.
While natural gas is one of the main export goods of the Republic – more in the first quarter brought the only foreign sale of oil and copper.
It is interesting that simultaneously with the decrease of gas exports, Kazakhstan is increasing its imports. In comparison with January-March 2019 volume increased by 43% (to 3.1 billion cubic meters), and in monetary terms, and is increased more than twice (up to $213,7 million).
Kazakhstan buys gas in two countries: Russia ($164,4 million while exports to this country at 16.3 million) and Uzbekistan (49.3 million while exports to 8.9 million).