Eesti Gaas CEO Margus Kaasik told ERR that people are being prepared for a tough winter in terms of the price of electricity and gas, while the actual situation will be revealed once it arrives.

"I would not be so terribly pessimistic when it comes to prices. Looking at European gas prices, they have been heading down in recent weeks, toward normalization," he suggested. "This is allowing gas companies to stock up at a more reasonable price if they can get in. Therefore, I would not see it as pessimistically as all that, that there is nothing we can do."

Kaasik hopes that the price of gas will normalize in the next few years as the current price has a sizeable panic component reflected in the fear of Russian deliveries ending that would cause an acute shortage.

"Taking a broader look at the European market, gas is abundant. Russian gas keeps flowing into Europe, albeit in reduced volume, while LNG deliveries are close to the maximum level – the market is very well supplied today," he assured.

The Eesti Gaas CEO added that new LNG terminals being built and the fear of missing deliveries disappearing could improve and cool the market notably. He could not say whether gas prices of €20-30 per kilowatt-hour will return but suggested the price level will normalize.

Kaasik suggested that a person who heats their dwelling using gas and is currently besieged by colossal bills should not rush to replace their heating solution.

He said that replacing gas with an air source heat pump requires a major initial investment, while gas and electricity prices are connected. Expensive gas translates into expensive power that the pump needs to generate heat.

"I believe prices will normalize after a period, settle down, in which case using gas will be entirely sensible," Kaasik said.

Kaasik added that power, gas and different fuels were quite cheap for a long time in Estonia, cheaper than they should have been perhaps, and that prices have quickly caught up and the pendulum swung to the other extreme now.

"What goes up must come down. That is how markets work," he said.

Alexela: Price of gas will come down to recent levels in a few years

Heiti Hääl, chairman of the supervisory board of Alexela, said there is no grounds for long-term pessimism. While the capacity to receive LNG is modest today, terminals are being built all over that will bring prices down.

"I remain very optimistic in the long run," Hääl said, adding that the time in between simply needs to be survived. "It will take a few years, but I believe the price of gas will return to its recent and more comprehensible level."

Hääl said that [Russia] sanctions have created the current situation and high energy prices this winter, while it takes major investments and time to affect change in energy.

"The right decisions were not made at the right time," he said.

Hääl added that Europe has fallen behind, betting too long on its traditional gas deliveries, while the green turn has led to increased gas consumption and demand exceeds supply.

--

Follow ERR News on Facebook and Twitter and never miss an update!