OIES Podcast – Impact of Russia-Ukraine War on Energy Markets Series – 6

In this latest OIES Podcast, David Ledesma is joined by Mike Fulwood and Jack Sharples to discuss the latest trends on the European gas market. We begin with the latest pricing developments, with day-ahead prices in NW Europe declining slightly, while remaining above 90 EUR/MWh.

On the supply side, it was noted that in the past week Russian pipeline supply to Europe has risen, despite the cut-off in supply to Poland and Bulgaria that took place on 27 April. Elsewhere, pipeline imports from North Africa and Azerbaijan remain flat, while flows from Norway remain above those from Russia, having reversed the relative decline seen in April.

In the world of LNG, supply remains robust after Europe experienced a record month for LNG imports in April. A particularly notable development over the past week is that daily imports (cargo offloads) remained robust, while daily sendout fell. The result is an increase in European LNG storage stocks towards full operational capacity. European underground gas storage stocks are now just over 5 bcm higher year-on-year, and Europe remains on track to hit its target of 80% full by 1 November, but with the caveat that this will only be possible if LNG imports remain sustained, and the Russian proposal for payment in Russian Roubles does not result in a dispute that leads to further cut-offs in Russian supply.

The previous OIES podcast with Mike and Jack was recorded on Day 1 of the Flame European Gas Conference in Amsterdam. Reflecting on the key takeaways from that conference, Mike notes the European buyers are now being encouraged to sign long-term LNG supply contracts, in sharp contrast to the urge just a few months ago not to sign such contracts in the context of the energy transition – while Jack highlights the emergence of notable pricing differentials between national markets in Europe in the context of infrastructure bottlenecks.