Mikhelson: only investments and new capacities will stabilise high gas prices
The only way to stabilise the situation with high gas prices is to increase investments and introduce new capacities – as stated by the Novatek Management Board Chairman, Leonid Mikhelson, at the 15th Verona Eurasian Economic Forum in Baku
“Analysts warned that gas prices will soar without new capacities. In 2020, the introduction of projects was slowed down by a pandemic and a collapse in demand. As a result, by late 2021, prices exceeded $2,000 per one thousand cubic metres [of gas]. With such a price increase in 2022, the EU recognised nuclear energy and natural gas as green energy sources,” Mr. Mikhelson said, adding that the gas market has been annually growing by 1.8 percent in recent years.
“At present, the world consumes about 4 trillion cubic metres of gas, and cross-country supplies account for 1.2 trillion. Over the past 4-5 months, Russian supplies to Europe have decreased by almost 50bn cubic metres and, as of October 1st, the drop made 47 percent against the last year’s figures. These supplies were almost completely replaced by liquified natural gas, and Europe has increased its consumption by 65 percent,” he noted.
The Novatek Management Board Chairman stressed that the LNG shortage will result in a difficult winter period for Europe, “Taking into account the current shortage of pipeline gas in Europe and the recovery of demand in China, an additional load on the LNG market in the next one or two years will be at least 60-70m tonnes, but we do not expect any major commissioning until 2026. In 2023, projects for 18m tonnes will be introduced in the world, in 2024 – for 11m, and about the same in 2025. Considering that the storages have been loaded by this winter, it will be probably the easiest one among the next three," Mr. Mikhelson said.
He added that, if gas prices remain high, the world market will begin to return to coal-fired power, which it has refused in recent years because of its harm to the environment. “Expensive gas will also deprive the global economy of development, since global GDP cannot grow in the current conditions. If the situation with prices is not corrected, demand will also begin to decline – and the world will start returning to coal,” the Novatek Management Board Chairman emphasised.
