In its place, a new index has been calculated based on the daily average of the prices of three key lists on the international commodity market: 1) the American Henry Hub, which has historically lower prices than those of the TTF, also due to the fact that the US They remain a significant producer of liquid natural gas; 2) The Jkm, parameter for LNG in the Asian market; 3) Brent, the London Oil Exchange historically dominated by Norwegian supplies, with its two trillion securities traded daily.
These are the cornerstones of the plan that Italy will present to the EU Council of Heads of Government scheduled for Thursday in Prague. The umpteenth attempt at negotiations to convince the reluctant countries of Europe by bringing them to a clear position on the issue of the gas price, which has increased by a factor of 20 compared to last year. A proposal on which the Minister of Ecological Transition, Roberto Cingolani, is working in collaboration with the technicians led by Sara Romano, head of the Energy and Climate Department of the same department. The main node for the countries of northern Europe, Germany at the top, remains the risk of gas shortages, which would set a price cap for those who would sell it to Europe and therefore orient themselves to favor other markets such as China. which they could offer more to buy it. That is why Cingolani wants to sterilize this risk, avoiding leaving Europe completely alone in the gas market, which is instead totally interconnected globally, with Russia, the main supplier for Europe with its 150 billion cubic meters per year, being just one of the actors in The Field.
The modular price fork, to be digested by all European countries, should have a fairly wide range or still consider a variable maximum value depending on the international methane price, otherwise the roof would come out, but again through the window. The complexity of the operation is everything here. Cingolani knows gas shipments to Europe are likely to be low for all of next year because the zero-flow scenario from Moscow that Italy has been experiencing for the past few days is now a reality. Rationing plans could do more on the price. Because minus the reference platform used to calculate it, it will be structurally high for the next three to four years, comments commodity expert Gianclaudio Torlizzi. A key variable will be the weather for the winter. The more rigid it will be, the more consumption will increase and stocks will erode, now at 90% for Italy, but which only represent 20% of our annual methane needs.
The International Energy Agency (IEA) confirmed this perspective yesterday. forecasts that LNG imports to Europe will increase by more than 60 billion cubic meters this year, which will keep the international market under great pressure. The agency conducted an analysis of the EU gas market in the event of a Russian supply disruption from November 1. In the absence of a drop in demand and with a full disruption of supply from Russian gas pipelines, EU storage levels would drop to 20% in February 2023 assuming high LNG supply and almost 5% if low LNG supply is assumed instead. Therefore, the price cannot be set too low, since the raw material is likely to be missing. Big LNG suppliers may favor energy-hungry people like China and India. Therefore, Cingolani also wants to use the Asian index to determine the fork. Not alone, of course, but not without either. Gas consumption in Europe has already fallen by more than 10%, driven by a 15% drop in the industrial sector as factories reduced production.