European gas conference INSIGHTS
New Year, New Themes
By Phillip Hirons, Managing Director at The Energy Council
Published 13th February 2024
Welcome to 2024. The year of the dragon, symbolised by power, nobility, honour, luck, and success. Whilst this bodes well for many of us, of the whopping 60+ countries heading to national elections this year – it simply can’t be true for everyone! The elections are where we’d like to kick-off this year, with over 2-billion people expected to vote in 2024, meaning the impact will undoubtedly be felt in the coming years and the gas markets are no different.
Whilst 4 out 5 of the top gas producing nations are holding national elections, what’s more interesting is that 8 out of the world's top 20 gas importing countries will be heading to the polls sometime in 2024. Add to this that Europe alone is expecting 18 elections (many with a push towards farther left or right leaning governments than in recent times) and, arguably more importantly, a parliamentary election in the EU itself. It’s fair to say that changes, relationships and priorities will shift in the coming years and predicting what this looks like becomes extremely difficult.
So, with that uncertainty in mind, what are we looking at in the here and now?
Gas prices to remain high and volatile?
The pivot away from Russian gas, thanks to new supplier agreements and reduced consumption across energy-intensive industries looks set to continue, and at the time of writing storage capacity across Europe still sit at record levels. However, according to Moody’s research, gas tariffs on European businesses and households will remain above their 2015-2019 average until at least 2031. For consumers, this will come as bad news, however, growing geopolitical concerns – think Russia/Ukraine, Israel/Hamas and the escalations of Red Sea attacks – are a stark reminder of the markets underlying exposure to supply disruptions.
New year, new resolution, new market?
The push towards a decarbonised European gas market continues, alongside the creation of a hydrogen market, following the provisional agreements between the European Parliament and Council. This will not only enable greater uptake of renewable and low-carbon gases through access and connection to the existing gas grid, but (hopefully) create a more harmonised approach through the establishment of a new certification system.
The coordinated approach remains to be seen, but the push towards “unlocking” hydrogen across Europe shows no sign of slowing down anytime soon, with the European Network of Network Operators for Hydrogen (ENNOH) coming into effect in 2028, creating a hydrogen network that is both cost and energy efficient. Naturally, this will shine a light on existing infrastructure, cross-border collaboration and interconnectors, all with the aim of establishing a more robust and competitive hydrogen market.
Are we heading for a saturated LNG market?
LNG export capacity continues to grow, with 193 mtpa currently under construction (41% growth YoY), with new import capacity at 203 mtpa (19% growth YoY). Including proposed projects, this represents an estimated $1 trillion in investment, with around half of all projects under construction in the US or Qatar. In addition, the likes of Canada, Mexico, Australia, Nigeria and Mauritania have significant projects under development, which will no doubt increase competition amongst exporters and put pressure on investors, operators and government to realise profits at a time when supply is plentiful. Import capacity is, as expected, dominated by Asia and Europe, but with key domestic markets reluctant to sign long-term contracts as they pursue decarbonisation efforts (and navigate political campaigns), are we quickly heading for oversupply and if so, what impact will this have on prices and assets?
If you're interested in the topics covered in this article, we will be expanding on these and continuing the conversation at the European Gas Conference with the below sessions
- Gas prices to remain high & volatile?
- New year, new market?
- Are we heading for a saturated LNG market?
- Day 1: Start the conference off with our panel at 12:25 pm on ‘Europe’s exposure to short-term price volatility'
- Day 2: Join the panel debate at 11:15 am on the topic ‘With prices and demand intrinsically linked, is Europe able to withstand more of the unknown?'
- Day 3: Join the opening panel at 9:10 am on the topic ‘What is the real cost of the energy transition?‘
- Day 1: Catch our panel session at 4:15 pm on the topic ‘Can we stop calling this a crisis?'
- Day 2: Join our session at 9:10 am on ‘REPowerEU: An update from Brussels'
- Day 3: Close the event with the much-anticipated panel debate at 2:10 pm on ‘The chicken and egg paradox: Can political intervention and creative financing unlock green hydrogen in Europe?'
- Day 1: Start off with our panel at 9:35 am on the subject ‘US Overview – A land of opportunity?'
- Day 2: Join us at 10 am panel session on ‘The future of gas in European energy security, deal structures, and international relations: Will pipeline gas ever recover market share in Europe?'
- Day 3: Hear more at the 3:50 pm session on ‘Could LNG terminals be repurposed to accommodate low-carbon hydrogen?'
European Gas Conference
Coming to Vienna in March 2024
The European Gas Conference was created to promote dialogue between Europe and its main suppliers.