No Premium, No Party

There is every reason to define 2020 as one of the most unpredictable years for the European gas market. It is not merely a matter of absolute price changes throughout the year.

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The peculiar feature of 2020 is the dynamics of geographic spreads, and the loss of former premiums on PSV against VTPA and TTF is in the spotlight.

Lower prices in the Italian market have had an impact on imports from both Austria and Switzerland in the second half of 2020, but the effect on supplies through Passo Gries was particularly tangible.

The transition from premium to discount between PSV and Northwest Europe has resulted from factors affecting the two regions simultaneously. Significant growth of TTF prices came on top of ongoing and upcoming developments in the Italian market, making the deliveries via Transitgas unprofitable.

Given the start-up of TAP and further expansion of LNG capacities in Italy on one side, and the need of Netherlands to import more due to a fall in domestic gas output, Swiss supplies are going to become even more marginal in years ahead.

What prospects for deliveries from NWE to Italy do you see, apart from being a sort of safety net in case of volume losses via other routes?

Source: Yakov Grabar

See original post by Yakov on LinkedIn.