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Gas prices in Europe renewed record highs and approached $ 500 per thousand cubic meters

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Gazprom has once again abandoned auctions for gas supplies through Ukraine, against the background of this, prices in Europe have risen to a record level. Low LNG supplies to Europe amid record empty storage facilities are also driving up natural gas prices.

Gas prices in Europe renewed record highs and approached $ 500 per thousand cubic meters

Futures prices (Front Month) for natural gas on the Dutch TTF in the last hours of trading on July 28 exceeded 39 euros per megawatt hour (MWh), peaking at 491 dollars per 1,000 cubic meters. Thus, gas prices have renewed the absolute maximum in the entire history of the European gas market. As a reminder, the previous maximum of 38.7 euros per MWh was set on July 5, 2021.

When converted into hryvnia, the cost of gas is 15 800 hryvnia per thousand cubic meters, including taxes. Gas in Ukraine is traded on Wednesday for about 1000 hryvnia cheaper than on European hubs. The rise in prices continues amid unscheduled shutdowns at a field in Norway. Deliveries from the Troll field to the Netherlands, Belgium and France are at a minimum. Also, the rise in prices for CO2 emissions has become an important reason for the rise in prices during the day.

At the same time, supplies of liquefied natural gas (LNG) to Europe are falling, and stocks in the storage facilities of receiving terminals are also decreasing. Since the beginning of July, the European gas transportation system has received 12% (about 1 billion cubic meters) less regasified LNG compared to June, and in annual terms, the decline was more than 22%.

All spare gas shipments are sent to Asia, where demand continues to rise due to the heat and the growing demand for electricity for air conditioning. China is the leader in LNG growth, which in July increased gas imports by a quarter in annual terms, demand is also recovering in India.

UGS reserves in Europe have decreased due to the fact that Gazprom was taking gas from storage facilities during the shutdowns of the Yamal and Nord Stream gas pipelines.

More than 80% of Gazprom's sales to Europe are now carried out according to spot indices of different time bases - from a month in advance to a year in advance. The observed price level will not instantly affect the contract prices of the Russian monopolist, but will further support them in the event of a correction. Gazprom's budget for 2021 includes the average price of gas exports to the far abroad at $ 170 per thousand cubic meters. The concern recently raised its estimate of the average price of its exports to non-CIS countries in 2021 to $ 240.

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