Trends in global natural gas prices and their impact on prices in Latvia

On 29 September 2021, Latvijas Gāze participated in the conference ‘HEAT SUPPLY 2021: Purposeful Achievement of Climate Objectives in Latvian Towns’ (orig. – SILTUMAPGĀDE 2021: mērķtiecīgai klimata mērķu sasniegšanai Latvijas pilsētās) organised by Dienas Bizness, in which the global conditions affecting the natural gas market and price changes both globally and locally were discussed.

At the conference, Egīls Lapsalis, the Head of the company's Sales Department, explained the changes in the price of natural gas over recent years and the events that affected these prices. At present, the price of natural gas is historically the highest in a very long period. "When looking at the price changes since 2017 (the gas market was opened), the changes are happening very fast. Before the opening of the gas market, the price was linked to the 9-month average quotations of oil products, but now, the price is determined by the exchange index. It means that we depend on circumstances beyond our control as well. Current forecasts suggest that in November, the price of natural gas might reach a record high level again. A challenging winter awaits us,” said E. Lapsalis.

Due to the low outdoor temperatures, in Europe, the low storage balances at the end of the previous heating season and the subsequent start of the pumping season mean that storage is currently underfilled. Demand for natural gas has increased in Europe and Asia as well. At the same time, there are various limitations on the extraction of the resource, such as repairs to the transmission system, insufficient capacity, and reduction in gas production. Demand is also growing because of Europe's climate objectives and the Green Deal, as gas is gradually replacing less environmentally friendly energy sources. The harshness of the approaching winter for the consumer will be determined by the air temperatures in Europe. In the event of a warmer winter, a fall in the price of natural gas can also be expected.

The presentation and video of the presentation are available here

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