Natural gas prices explode: EU struggles with uncertain future prospects!

Natural gas prices explode: EU struggles with uncertain future prospects!

The worldwide natural gas market is in a profound change that is largely shaped by political and economic factors. The raid of Russia to Ukraine has not only changed the geopolitical landscape, but also significantly influenced the trade dynamics of the natural gas. According to owls, fewer Russian pipeline earth-gas is imported and instead increasingly rely on LNG, i.e. liquefied natural gas. This is also reflected in other reports, such as that of the German Chamber of Commerce and Industry, which presents a detailed analysis of the earth's gas situation.

Despite the current market development, natural gas remains a costly option, and this trend is expected to be observed in the long term. There are several factors that contribute to the more expensive LNG. This includes the complex logistics in which transports in special ships and decompress stations are necessary, as well as the possibility for sellers to conduct ship loads in real time to the customers who pay the highest prices. In addition, the prices for CO₂ certificates are increasingly increasing due to legal regulations, which continues to increase the costs of natural gas use.

Market developments and forecasts

The forecasts for a global price reduction after the Ukraine War are classified as risky. During 2022 and beyond, the analysis shows that gas trading in Asia and developments on the American fracking market have significant effects on the global natural gas market. It should be emphasized that the Asia-Pacific region will experience the strongest increase in consumption in 2024, led by China, which could further heat the demand for LNG. The World Bank's report announced that global consumption in 2024 is expected to increase by 2.7 %.

In Europe, some natural gas network companies have already started to reduce their networks because the operating costs are considered too high. The conversion to green hydrogen networks is associated with considerable costs, which are ultimately passed on to the end customers. Despite the desire of the population after a stronger switch to renewable energies, natural gas remains "green" and worthy of subsidy according to the EU definition.

Reactions and challenges

In the course of these developments, end customers are increasingly reacting with investments in private photovoltaic systems and battery storage. However, the earth's gas sector presents itself as torn and in uncertainty, since the investments without government subsidies are becoming increasingly difficult. However, speculative profits do not offer long -term perspective, which further increases uncertainty in the market.

Overall, the situation on the global natural gas market shows that the changes not only have a short -term character, but also shape the future energy concepts and strategies of many countries. The role of LNG as a short to medium-term alternative to eliminated pipeline imports is thus increasingly reinforced, which also influences Germany's strategic direction in the energy sector, as can be seen from the analysis reports.

In summary, the natural gas market is a dynamic and challenging terrain in which geopolitical developments and technological changes go hand in hand. It remains to be seen how the situation develops and what role renewable energies will play in this context.

The content of this article is based on the comprehensive information of Econews, dem German Chamber of Commerce and Industry as well as the explanations of the World bank.