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European Gas Market Forecast – Annual Report 2019

We are pleased to present the latest edition of our European Gas Markets Forecast. It presents Aurora’s latest view on the state of the European gas markets, and includes our updated outlook on natural gas prices, the EU supply/demand balance and pipeline and LNG flows to 2040, as well as analysis of market and policy developments since the start of 2018, including in this edition – a special focus on German gas policy.

Key messages emerging from the analysis are:

  1. The average price in real 2018 Euros for TTF (representing the most liquid hub), rises from €19.5/MWh in 2019 to €29.8/MWh in 2040 (an increase of 53%). Across the forecast (2019-2040), the North West European gas price is lower by an average of €0.7/MWh (2.5%) compared to our February 2019 forecast, reflecting the effects of futures (which have fallen since the previous forecast due to mild Asian and European winters, full storages and ample LNG supply) and fundamental changes to the underlying modelling (primarily a decline in European gas consumption compared to the previous forecast due to lower gas-for-power demand).
  2. High renewables penetration causes gas for power demand to decline in North West Europe, whilst residential, industrial and service sectors see declines in consumption due to increasing energy efficiency. Ultimately, European gas demand declines by 6% between 2020 and 2040, from 459 bcm to 432 bcm.
  3. The coming online of the 10 bcm East Med gas pipeline and the adjoining 15 bcm Poseidon pipeline – which collectively connect gas from the Levantine Basin with demand in Southern Europe – does not lead to substantial increases in flows into Southern Europe. The 10 bcm Wilhelmshaven and 5 bcm Brunsbuettel LNG import terminals on the German North Coast do not materially alter LNG import volumes into Germany in the absence of contracts.
  4. With the accelerated decline in production from the Groningen field, European imports of Russian pipeline gas and LNG both increase across the forecast – to 205 bcm and 58 bcm respectively. Dutch import dependency increases to almost 90% by 2040, as small fields decline after ramping up to compensate for Groningen.

The exhibits from the report, as well as additional results, can be downloaded in PDF and Excel formats from the reports section of EOS.

As always, if you would like to discuss our results, please get in touch.

Best wishes,
The Aurora Team

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