17 June 2013 23:48 [Source: ICIS news]
WASHINGTON (ICIS)--Higher natural gas prices in Europe, stemming from a more seasonal and residential demand pattern, may level off once North American liquefied natural gas (LNG) exports begin coming into the region, an industry executive said on Monday.
Europe has a massive amount of LNG pipeline import flexibility, which gives it unique options for balancing the market, where gas demand is highly seasonal, said Ira Joseph of PIRA Energy Group.
“Working gas inventory capacity is 60% of the size of the North American market even though the European market is roughly the same size and more seasonal in its demand patterns,” said Joseph during the US Energy Information Administration (EIA) 2013 Energy Conference. “The European seasonal gas production shows immense market power held by gas producers.”
However, supply is becoming more concentrated in Europe and imports of North American LNG should break this pattern.
“Once North American exports being in 2016-2017, this sort of level of concentration should break the pattern [of higher prices],” said Joseph.
Furthermore, European natural gas demand is falling due to high prices, which is hurting its competitive position in industry since most of its demand is based on residential and commercial uses.
This is the opposite of the US market.
“In Europe, a combination of coal and renewable fuels has taken out natural gas. In the US, natural gas has replaced coal,” Joseph said. “Changes in US and European natural gas prices will become more closely tied together once North American LNG exports begin.”
The EIA Energy Conference runs through Tuesday.
Follow Anna on Twitter
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections