CEE Gas Hub Prices

(Yakov Grabar) In terms of price dynamics, European gas market has been clearly divided into northwest and central areas in recent weeks. While prices in both regions rise as winter approaches, spot values on TTF and German hubs have been growing much faster than VTP Austria or Slovakia quotations.

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Day-Ahead at VTPA fell to about EUR1.50/MWh below TTF at the beginning of Q4, representing the deepest discount since March 2018. The reason for such an inversion is quite obvious given the volume accumulated in the Ukrainian UGS in April – August, what made the demand for spot products on VTP Austria and Slovakia limited in late summer season.

The issue is when the spreads between NWE and CEE can go back to their normal standing?

It seems the answer lies more in further developments in the west than in Central Europe. So far, there are a limited number of factors that can push Austria and Slovakia values up in the short run in comparison with the Netherlands or Germany.

Meanwhile, more LNG imports amid improved economics, eventual de-escalation of labour strikes in Norway and filling the regional storages to 100pc will likely put downward pressure on near-curve TTF/NCG/Gaspool prices thus narrowing the premiums.

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