ENTSOG Gas Regional Investment Plan (GRIP) 2017 - 2026 / Southern Corridor / Main Report

40 35 30 €/MWh

Comparison of EU wholesale Gas Price Estimations

10 15 25 20

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2013 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 2014 2015 2016

UK NBP hub day-ahead price

Norwegian gas to Belgium Algerian gas to Italy

Russian gas to the Czech Republic

Russian gas to Latvia

Average German border price

Figure 4.9: Comparison of EU wholesale gas price estimations  3)

Figure 4.9 shows that all import contracts tended to align towards NBP prices, progressively following a trend which in the past was restricted only to Norwegian gas to Belgium. Gradual renegotiation of long term contracts and indexation to hub prices instead of oil quotations are both drivers behind the emergence of a correlat- ed EU-wide price reference.  3) Broadening even more the analysis scope and taking into consideration worldwide trends, it is possible to observe a progressive alignment of prices extended till Far-East, with an increased correlation of global natural gas quotations. Henry Hub spot prices stayed relatively stable as the lowest value, being a sign that shale gas production in the USA still plays a strong downward role on natural gas cost. Figure 4.10 shows that Japan prices considerably aligned towards the main European market references, as likely indication that the strong pressures started after 2011 Fukushima nuclear accident are fading away.  4)

USD/ mmbtu

International Comparison of wholesale Gas Prices

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20

15

10

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2013 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 01 12 2014 2015 2016

US (HH spot)

UK (NBP spot)

German Border

Japan LNG landed prices

Figure 4.10: International Comparison of wholesale gas price  4)

 3) Source: EU Quarterly Report on European Gas Markets, 4Q 2015 (page 28) https://ec.europa.eu/energy/sites/ener/files/ documents/quarterly_report_on_european_gas_markets_q4_2015-q1_2016.pdf  4) Source: EU Quarterly Report on European Gas Markets, 4Q 2015 (page 22) https://ec.europa.eu/energy/sites/ener/files/ documents/quarterly_report_on_european_gas_markets_q4_2015-q1_2016.pdf

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Southern Corridor GRIP 2017–2026