Gas prices rise in Europe: Russian economy will benefit

by time news

Problems of the Old World will replenish the domestic budget

Europe is facing an acute energy crisis. Another record was broken: the price of gas during the auction exceeded $ 810 per 1,000 cubic meters. The expert told MK how the problems of the Old World will affect Russia. Lev Kravets, chief analyst at Esperio, believes that the rise in European natural gas prices will lead to an increase in tax revenues to the domestic budget.

-Why is the gas price growing?

– Natural gas prices are growing due to an acute shortage that has developed in the gas market since the beginning of summer 2021. The last heating season in Europe and Asia dragged on due to a cold spring: stocks in storage facilities decreased to multi-year lows (20-30% below the average values ​​for the last 5 years).

Buyers from Asia, due to their willingness to pay a premium to European prices for LNG, were able to redirect most of the supply of liquefied gas to themselves, while the Europeans relied on pipeline gas from Russia. Hot summers and high demand for electricity for air conditioning did not allow Europe to significantly increase stocks over the summer months: their level by mid-September barely exceeded 70%.

Earlier, German Chancellor Angela Merkel and US President Joe Biden reached an agreement on the unhindered completion of the construction of Nord Stream 2 (SP-2), which reduced the severity of gas shortages for European buyers, this is clearly seen in the decrease in gas prices in early August by 10% …

However, then new problems arose. For example, the delay in certification of SP-2 by the Federal Network Agency of Germany.

It is easy to understand that a certificate for the use of SP-2 can only be obtained on January 13, 2022. It follows from this that there will be no additional supplies of Russian gas to Europe. Therefore, gas prices are growing and will continue to rise.

-Your predictions. Will gas continue to rise in price?

– The shortage of supply on the gas market will remain until a decision is made on certification of SP-2. The smartest option would be to have the procedures carried out by the German Federal Network Agency in a shorter time frame. But here politics can intervene. On September 26, parliamentary elections will be held in Germany, in which the Green Party, which opposes SP-2, can get a majority. Therefore, locally, until the end of September, the rise in gas prices may continue by another 5-10%.

-Prospects of what is happening for Russia?

– For our country, high gas prices are certainly beneficial. This provides a direct increase in the profits of Russian gas companies, as well as an increase in the volume of tax revenues to the budget.

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