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CURRENT DRIVERS AND PRICE DEVELOPMENT ON NATURAL GAS MARKET - FOCUS ON EUROPE
Abstract
This paper examines changing environment of natural gas market with focus on Europe. It discusses the supply demand balance suggesting that developments in recent years will likely lead to higher natural gas prices and the need for new infrastructure in order to provide energy security at affordable prices. Last decade has seen significant fluctuations in prices of natural gas globally. In middle of 2018 market signal indicates that prices have bottomed out in the first half of 2016 and now they are on upward trajectory. This seems to be in contradictions to recent expectorations of experts predicting that extra LNG supply coming on stream will lead to global markets being flushed by natural gas with consequent impact on the prices. In this paper, we summarized predictions from last decade by IEA and then analyzed the supply and demand evolutions on natural gas markets paying closer attention to recent years. We concluded that lower prices that curbed investments in recent years and strong demand from China, which exploited the period of low price of natural gas to implement environmentally oriented policies created environment, which prevented price collapse and might have started another price rally of natural gas prices. Further, we imply these developments needed to be considered with respect to discussion of energy security of EU, which is getting more import dependent after recent cuts of endogenous production.
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