PARIS: Europe’s struggling industries are bracing for a new gas price shock over the coming winter months, as colder weather depletes stocks, competition with Asia for liquefied natural gas intensifies, and the prospect of reduced Russian supplies looms.

Since the energy crisis of 2022, when gas prices peaked at nearly 350 euros per megawatt hour (MWh), dozens of firms across Europe have closed factories and cut activity and jobs as high gas prices undermined their competitiveness.

Many are maintaining reduced demand and lower manufacturing activity, with negative implications for Europe’s sluggish growth.

European Union gas demand is 17 per cent below the five-year average observed during pre-pandemic years.

At the same time, gas prices are at their highest level in over a year and analysts predict they will rise further.

“The concern is that we are laying our guard down because energy prices are lower now than what we saw in 2022,” Svein Tore Holsether, CEO of Oslo-listed Yara, a fertiliser company, told Reuters in October.

“Its important to remind ourselves that were still at much higher levels than other key regions like the US, the Middle East, and Russia.

Nervousness about the expiry at the end of the year of a Russian transit deal to supply gas to Europe via Ukraine has helped to drive buying.

Published in Dawn, December 8th, 2024