Gas crunch threatens industry in UK and Europe

British Gas owner Centrica Global supply crisis This could increase household bills and force energy-intensive companies in the UK and Europe to curb activity this winter.

Natural gas prices are trading about five times higher than they were two years ago, and are already at record levels by this time.European countries may face Supply problems Demand is strong this winter as gas suppliers failed to fill storage during the summer.

Kasim Mangera, an energy trader in Centrica, told the Financial Times that it could push prices up for protracted or especially cold winters, and some energy-intensive companies have options other than curbing production. Said that there was almost no.

“I’ve never seen a price situation like this. If you can’t attract supply, the only option is to reduce demand to balance the market,” Manguera said.

“If supply is tight this winter, another way to balance the market is through economic activity. If prices are really high, some gas-dependent companies in the UK and Europe simply don’t produce. May decide. “

The warning could be winter if high prices force industry to limit production or close factories against the backdrop of a prolonged pandemic and a new surge in coronavirus cases this winter. To increase.

During the summer, supply conditions in the UK and Europe “worse rather than improve,” said Tom Marzec-Manser, an analyst at energy consultant ICIS.

“That’s why prices keep rising,” he said. “Industries that turn down production in the UK and the European Union are not unthinkable, but if that happens, it may be only a short time during peak winter demand.”

The Department for Business, Energy and Industrial Strategy said the UK has “a very diverse source of gas”, but the country’s “exposure to volatile world gas prices is a solid domestic renewable energy sector. It emphasizes the importance of planning to build. “

It encourages consumers to “look around” for cheaper rates and plans to try automatic switching for households that default to higher rates.

In 2021, the demand for natural gas, which is widely used not only for power generation but also for heating and industrial applications, will increase worldwide. Prolonged winters in Europe and Asia have reduced storage levels and countries are increasingly prioritizing the use of gas over coal. This is because carbon emissions during combustion are low.

In Asian countries such as Japan, South Korea and China, imports of liquefied natural gas (LNG) are increasing and can be moved by tanker, leading to the globalization of markets that previously relied heavily on pipelines and links to oil. I am contributing.

However, strong demand continues during the summer as high temperatures in Asia boost air conditioning demand and expose more countries to environmental pressures to reduce their dependence on coal.

“Currently, Europe and the United Kingdom have enough gas to meet daily demand, but not enough to meet storage,” Manguera said.

“Based on where we are today, long and cold winters can cause problems. To ensure that demand is met, we need to attract LNG, regardless of price.”

Mild or short winters can lower gas prices, but there are long-term supply concerns.

Russia, the largest gas exporter to Europe Criticized For shipping Lower supply This year, prior to the launch of the Nord Stream 2 pipeline to Germany. Russia’s state-owned monopoly pipeline supplier Gazprom has shown this week that launching Nord Stream 2 later this year will not immediately increase planned supply to Europe.

In the UK and Europe undulation of Carbon priceIncreasing the costs of utilities and industries that use polluted fuels can also boost gas demand. EU carbon prices are twice as high as before the pandemic, and similar post-Brexit carbon contracts in the UK are at similar levels.

“Previously, there was more fuel switching,” said Centrica’s Mangera. “If gas prices are too high, utilities will switch to coal.” “But these days it’s not really an option given the soaring carbon prices in the UK and the phasing out of coal generation.”

UK households rose their living expenses in August when gas regulators announced that the maximum gas price for 11 million households with variable contracts would rise £ 139 a year to £ 1,277.

Under the “Price Cap” system launched by former Prime Minister Theresa May in May 2019, Ofgem can block gas suppliers from charging beyond the median price calculated from various inputs.

The next review will take place in February, which means that if wholesale gas prices continue to rise, household bills will surge further in April. Ofgem Estimate Its wholesale price accounts for more than one-third of the average household gas and electricity bill.

“We are confident that we have enough power to keep the UK lights on,” said National Grid ESO, a power system operator, in a preliminary winter outlook earlier this summer. National Grid will announce its winter gas outlook later this year. LNG accounts for almost one-fifth of the UK’s gas supply. Last winter, Imports from the EU account for about 10 percent.

Major manufacturers are concerned that one executive has called it a “significant rise” in energy prices in recent months.

Frank Aaskov, Energy and Climate Change Policy Manager at UK Steel, said rising fuel costs are becoming a major concern for energy-intensive sectors such as steel, but the industry may need to limit production. I couldn’t say that it wasn’t.

“The steel sector is already facing uncompetitive electricity prices compared to its EU competitors … And the recent rise in energy prices has greatly exacerbated this situation,” he said. ..

“Bring markets and healthy material prices have eased this impact so far, but as steel prices soften in the coming months, it can be a big problem.”

Gas crunch threatens industry in UK and Europe Source link Gas crunch threatens industry in UK and Europe

Related Articles

Back to top button