Unprecedented Increase in Gas Prices in Europe

Business | March 7, 2022, Monday // 21:12
Bulgaria: Unprecedented Increase in Gas Prices in Europe Pixabay

An unprecedented increase in the price of natural gas in Europe. Blue fuel price jumped nearly twice in just one day. At the same time, the Energy and Water Regulatory Commission (EWRC) fixes the price of natural gas for March.

According to the London Stock Exchange, natural gas prices topped $ 3,500 per 1,000 cubic meters today, and according to the Dutch hub TTF, quotes rose by nearly $ 1,000 in just one hour. Prices across Europe have risen sharply since the recognition of the sovereignty of the Luhansk and Donetsk People's Republics and the beginning of the Russian offensive in Ukraine.

Energy experts point out several main reasons for the drastic increase in the price of blue fuel. “Undoubtedly this is due to Europe's preparations to impose an embargo on gas supplies from Russia,” said energy expert Vasko Nachev.

“Everyone expects a shutdown of natural gas from Russia and for this reason, we are looking for fast, spot supplies of natural gas,” said energy expert Hristo Kazandzhiev.

Due to the COVID-19 crisis, the price of natural gas has started to rise steadily since last spring. According to economists, the war in Ukraine has created even more unstable ground for gas markets, and its consequences would be felt in many areas.

“The chemical industry needs gas the most, the oil industry also uses gas. In Bulgaria in particular, our district heating companies run on gas. Heating is something that may be under the influence of the increase in gas,” said economist Stoyan Panchev.

Experts are of the opinion that Bulgaria is favored with regard to natural gas heating. “About 3% of households use gas for heating. In Western Europe, this percentage is close to 40,” said Vasko Nachev.

The President of the European Commission also took a stand on the topic. “We need to end our dependence on Russian gas, oil and coal. We will diversify supplies from Russia and start using reliable suppliers,” said Ursula von der Leyen.

Against this background, the EWRC fixed the price of natural gas in Bulgaria at BGN 113 per megawatt-hour or an increase of 3.5% compared to February. The energy regulator's position says the reasons are limited production from the Chiren gas storage facility and trends in European gas exchanges. However, the war in Ukraine did not affect the formation of the price.

“3.5% is not a small increase in prices. In my opinion, we have not seen the additional perimeter of the war,” said Stoyan Panchev.

“Consider that the increase in April will be quite serious,” predicts Vasko Nachev.

Experts call on Bulgaria to use March to prepare before fixing the new gas price. They also call for a clear plan in a scenario in which Russian gas to Bulgaria stops.

There has never been such a lasting increase in the price of natural gas in the history of European gas hubs since 1996.

/Nova

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