According to ACER’s preliminary assessment, gas supply sourcing costs in most EU Member States (MSs) fell by more than 3 euros/MWh in 2019 compared with 2018. The assessment considers prices of hub traded products, declared imports and domestically produced gas.
Among the main findings:
- Record deliveries of liquefied natural gas (LNG) driven by international gas market dynamics, robust pipeline imports from Russia and Norway, and gas storages that had already been well stocked at the beginning of the injection season were some of the major contributing factors to EU hub’s spot prices dropping to ten years’ lows in 2019. This translated into much lower sourcing costs.
- Convergence in sourcing cost remained robust in 2019 among the majority of MSs. However, as gas prices did not fall simultaneously and to the same extent across all countries, in some gas markets the gap with the benchmark Dutch TFF cost grew bigger than in recent years. This gap was largest for less integrated and diversified markets, where reliance on long-term contracts remained high.
- Generally, the combination of marginal supply and market opportunity pricing explains the enduring sourcing cost differences between some MSs. Both are in turn affected by factors like competition, transportation costs, predominant sourcing mechanisms and market structure.
These aspects will be further examined in the next edition of the Gas Wholesale volume of the Market Monitoring Report, which will be published in September. The report will also contain the exact price estimates per MS and gas supply sourcing mechanism.
Read more on ACER website.
