What will be the price of gas (and therefore electricity) in Europe at the end of the year? Even taking out his crystal ball, no expert claims to be able to establish a reliable forecast. Experience does not help them much. Contrary to what was expected, gas prices have dropped significantly since this summer, dropping from over €300/MWh at the end of August to €150/MWh in the fall, and between €60 and €75/MWh at the end of January.
The key role of the weather
There are five big reasons for this. One: Europe has fully filled its storages. Two: the massive arrival of liquefied natural gas (LNG) has made it possible to compensate for the virtual halt in Russian deliveries. Three: the Chinese slowdown, linked to the multiple confinements in the country, has slowed down its needs (14% less LNG purchase). Four: European demand fell (–20% year-on-year) with the implementation of savings measures. Five: the temperatures were very mild.
“Europe has reduced its consumption by 50 million tonnes in 2022. 50% of this is linked to weather conditions, 25% to a destruction of demand by manufacturers because prices were too high and 25% to sobriety», explains Pierre-Franck Chevet, Chairman of IFP Énergies nouvelles (Ifpen).
Questions about the Chinese economy
But nothing says that history will repeat itself for next winter, even if the situation seems a little more comfortable, thanks to stocks which are melting very slowly. After an average of €123/MWh in 2022, the price of gas for delivery in 2024 is around €60 MWh, which is still three to four times higher than before the health crisis.
The main unknown for 2023 is whether or not the Chinese economy will restart. This is what will drive oil and gas prices, up or down. Because on the supply side, there are few additional volumes to be expected. There are no large gas fields coming on stream in 2023 and utilization of the LNG carrier fleet is at its peak, while global LNG demand will continue to grow, rising from 400 to 410 million tonnes.
European gas demand forces countries to switch back to coal
This imbalance between supply and demand therefore risks creating pressure on prices. Europe alone is expected to consume 140 million tonnes of LNG in 2023, or 25 million more than in 2022. It will have to be found somewhere.
“Already in 2022, it was urgently necessary to divert 10% of the world market to Europe, which was taken from China and the countries of Southeast Asia”, says Patrick Pouyanné, CEO of TotalEnergies. According to him, countries like Vietnam and Bangladesh have thus been forced to abandon gas, which has become too expensive, to return to coal.
Joe Biden wants to increase oil production
The same uncertainties remain on the evolution of the oil market. According to the consensus of analysts collected by the Reuters agency, the average price of a barrel of Brent will fluctuate between 80 and 110 dollars in 2023, i.e. a level ultimately close to that of 2022 (101 dollars), against 70 dollars in 2021.
Everything will depend on the scale of demand (and therefore of China), which could once again cross the 100 million barrels per day mark. OPEC could continue to pursue a restrictive policy. It remains to be seen what the policy will be in the United States. President Joe Biden has urged companies to pay fewer dividends to shareholders to spend more money on increasing their oil production.
The emergence of a gray market
The embargo on Russian hydrocarbons is also upsetting the cards. “The global oil market is falling apart, with the emergence of a gray market with production from Russia, Venezuela and Iran. Pharmacies are also beginning to be created in Dubai,” says the boss of TotalEnergies.
According to calculations by Ifpen (formerly the French Petroleum Institute), Russia has almost compensated for the decline in its oil sales volumes to Western countries by turning in particular to India, which on the other hand buys it much less. Dear.
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Biogas for vehicles is gaining ground
At the end of 2022, 33,000 vehicles were running on BioNGV, biogas dedicated to transport, including 9,000 trucks and 7,400 buses. This represents growth of 30% over one year, according to the French Association of Natural Gas Vehicles (AFGNV), which presented these data on Thursday February 9, regretting insufficient state support. According to her, the BioNGV has a better carbon footprint than the electric vehicle, if we take the entire life cycle.
The number of public refueling points continues to grow. There were 103 in 2021, 305 in 2022 and the figure of 360 should be reached in 2023.