SINGAPORE: Global gas prices are expected to remain volatile, even though Europe is better positioned heading into winter this year, said industry executives at a conference on Tuesday.

Global gas prices leapt to all-time highs last year after Russia cut its gas supply to Europe, leading the bloc to import record amounts of liquefied natural gas (LNG) and causing Asian spot prices LNG-AS to hit historic highs.

Michael Lewis, CEO of German utility Uniper, said that while Europe’s natural gas market was much better positioned this year thanks to reduced industrial demand and higher storage levels, European gas prices remained subject to volatility.

“The most important thing is the storage position, it is much better this year, we already hit the 90 per cent target,” Lewis said in an interview on the sidelines of the Gastech conference in Singapore on Tuesday.

“We have all of the right factors in place, but the price is very sensitive... The price elasticity has changed. It is volatile, and the situation is potentially fragile,” he said.

“Temperature is the key factor that will cause probably a very significant price swing, but I think we will be able to cope with it,” Lewis said.

Meanwhile, a senior executive at Chevron said on Tuesday that the global LNG spot market is expected to stay volatile until 2025, and even a normal winter in Europe could be difficult as far as gas supplies are concerned.

“As we go into this winter, if it’s a normal winter, it could be a very difficult time for some of the Europeans like Germany and other countries,” said Freeman Shaheen, Chevron’s head of global gas business.

Winter LNG prices that are expensive relative to coal could deter some buyers in Asia, said Russell Hardy, chief executive of Vitol, the world’s largest independent oil trader.

“You’re going to continue to see in Pakistan, to some extent India, some extent China... they’ll make choices not to take in LNG at these prices, and they’ll use other fuels,” he said.

Published in Dawn, September 6th, 2023