The European Gas Market Forecast, 2018 annual edition presents Aurora’s latest view on the state of the European gas market, and includes our updated outlook on natural gas prices, demand, and supply in Europe to 2040.
Key messages emerging from the analysis are:
- NBP prices are 4.6% (or €1.05/MWh) lower than our Q4 2017 forecast on average from 2018 to 2029, caused by exploration and production success leading to higher North Sea production in the short-to-medium term
- Production cuts at Groningen mean that the European supply-demand balance shifts materially in favour of Russian pipeline gas in particular, where the commissioning of the Nord Stream 2 pipeline in 2021 enables Germany to emerge as a gas trading hub in routing gas into Central and Eastern Europe, superseding the Ukrainian corridor
- Asia drives LNG demand growth worldwide, pulling Qatari LNG away from Europe, which is substituted by LNG from USA and Russia. As LNG terminal buildout in the US dominates that of Qatar, and terminal utilisation increases, US LNG is priced close to its long run marginal cost. This raises prices in Asia and also in Europe, where US LNG continues to successfully compete with Russian LNG towards the end of the forecast
- In the long run, NW European gas prices reach €29/MWh in 2040, similar to our Q4 forecast