European energy prices remain stable in April

Originally published at Europe in Review on May, 2023

Energy prices largely remained stable across Europe in April after the continent moved to diversify its energy supplies away from Russia after Moscow’s invasion of Ukraine in February 2022.

Claudio Descalzi, the CEO of Italian oil and gas major ENI, stated in an interview with La Stampa on April 29 that he expected no energy price shocks this year, claiming: “Dependence on Moscow is behind us, in 2023 gas prices are under control.” [LS]

Russian gas had been largely replaced by new pipeline imports from North Africa and liquified natural gas (LNG) imports from the US, Descalzi said. Chinese demand would play a critical role in determining global oil and gas prices in 2023, and this demand had not yet fully recovered from pre-Covid-19 levels, he said. [Reuters]

Gasoline prices rose a tenth of a percent across Europe while diesel prices fell an approximately equivalent amount. Despite two French liquified natural gas terminals being shut for repairs, prices did not rise and UK storage remained at an unseasonal high. [Bloomberg][GP][Bloomberg]

Despite the stable energy prices, international consulting firm McKinsey predicted in an April report that energy prices will remain high for the next two years at least. To offset the prices, McKinsey said European companies with significant energy needs, such as manufacturers, should consider separate long term energy contracts, known as power purchase agreements (PPPs). [McKinsey]

PPPs would lock in current higher long-term prices, but they would shield companies from market volatility and the possibility of even higher future prices, as was the case during record price swings in August 2022.

EU launches corporate group gas purchasing platform

The European Union (EU) launched a corporate gas group gas purchasing platform on 25 April. The EU will act as global matchmaker through a market making platform, but will not buy gas for commercial firms. Eighty companies, including leading Polish oil and gas firm PKN Orlen have confirmed participation. [FT] [Reuters]

Companies must register by May 2 in order to participate. Companies can specify pipeline gas or liquified natural gas (LNG). The policy goal of this EU measure is to supply 15 percent of EU gas storage needs, focusing on industry, which has been hard hit by energy price spikes following the curtailment of Russian natural gas supplies subsequent to the Russian invasion of Ukraine. [Reuters]

(rw/gc)