Gas expert says Europe will avoid 2022‑level crisis this winter
Although Europe's gas storage levels are at their lowest since 2012, filling them cannot be a goal in itself because gas also arrives through LNG terminals, Baltic Energy Partners board member Marko Allikson said. He eased concerns and said that Europe will not face a gas crisis like the one in 2022 this coming winter.
When Bank of Estonia President Ülo Kaasik advised fixing the price, Allikson said it may already be too late. But he added that anyone unable to pay a gas price that may rise sharply in the short term should still consider fixing it.
He explained that Europe's gas storage levels have been monitored since 2012, and they have not been this low since then. But storage levels are not the only indicator. Consumption has also declined recently, combined with concerns about what is happening in the Strait of Hormuz.
Allikson said storage levels are low because gas prices are usually cheaper in summer and more expensive in winter. Over the past year, the price gap has been reversed. When companies wanted to buy gas in summer, the price for the following month was higher, and naturally no one wants to buy gas at a higher price. Purchases were postponed, but now there is no more time left to postpone.
At the same time, Allikson noted the goal is not only to fill storage but primarily to cover consumption. In Europe and in our region, gas comes not only from storage but also through LNG terminals. And there are many more terminals both in Europe and in our region. Consumption has also decreased.
Allikson said focusing on storage as a direct goal in Europe may not have been the right approach. What actually matters is that there is enough gas and that the price is reasonable. The market's job is to find the right amount that should be purchased for storage. After all, who wants to buy expensive gas for storage only to sell it later at a lower price?
Allikson recalled 2022 and 2023, when Germany bought €8.5 billion worth of gas at higher prices, which it later had to pass on to consumers. The Netherlands also bought at higher prices, and Austria did as well. Estonia also purchased gas reserves during that time, which today remain in Latvia's storage. Buying expensive gas during a crisis is not always the best move.
Today's gas prices are roughly twice as high as a year ago. But Allikson said this does not translate directly into consumer prices because gas also includes transmission and network fees and other costs that remain unchanged.
He said the best remedy for rising gas prices is finding alternatives. Alternatives are being sought in Narva and other Estonian cities, and this is happening across Europe.
Allikson said people should not overthink the situation because a crisis like 2022 will not happen this coming winter. But everything depends on the scenario. If the winter is very cold, prices may indeed rise. But if the winter is mild, prices may fall immediately.
He added that support measures can always be found to help consumers cope with high prices. This was also done in 2022. It is always possible to consider such measures, but whether prices will reach that level is another matter. It may be wise to be prepared, and if prices do not reach that point, no one loses anything. But we would be ready, Allikson said.
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Editor: Urmet Kook, Argo Ideon
