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European Commission releases 4Q18 energy market reports

Published by , Editorial Assistant
Hydrocarbon Engineering,

The European Commission’s latest reports on gas and electricity markets, which cover 4Q18, have been published, containing a wide range of data about supply and usage of electricity and gas in the EU.

The gas market report shows that gas imports decreased by 3% in the 4Q18, relative to the same period in 2017, while EU gas consumption for the whole year was 474 billion m3 or 1.8% lower than the previous year. Indigenous gas production in 2018 fell to 120 billion m3, equivalent to an 8% drop.

The UK became the largest gas producer country in the EU and the Netherlands (previously the largest) became a net gas importer for the first time since the gas extraction started in the country. In 2018 the EU imported 363 billion m3 natural gas, resulting in an import bill of €90 billion, up from €75 billion in 2017. Russia remained the biggest pipeline gas supplier to the EU in 2018, ensuring around 40% of imports. However, in 4Q18, owing to shrinking market price premium in Asia, LNG imports showed a significant increase – up 59% compared to 4Q17.

Both the US and Russia managed to increase its share in total EU LNG imports. European companies (such as PGNiG in Poland) concluded several long-term LNG import contracts with US firms in 2018, aiming at diversifying import sources and enhancing security of gas import supply. After reaching a five year highs in September, wholesale gas prices in Europe decreased measurably in 4Q18. Falling oil and decreasing coal prices, abundant LNG supply in Europe and mild weather conditions putting a lid on heating needs all contributed to the decrease in wholesale gas prices.

Spot gas prices during 4Q18 were, however, higher than forward contracts. Retail prices for industrial customers increased by 13% in the period on EU average, compared to the same quarter of 2017, reflecting the impact of higher wholesale prices in the previous quarters filtering in retail contracts.

In December 2018, the European Commission adopted a communication aimed at strengthening the international role of the euro, including the energy field. It noted that increasing liquidity on the euro-traded gas hubs in the EU contributes to strengthening the role of the euro in the energy sector.

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