It all looks like a good season for gas people. Or does it?
This article was written by Lubor Veleba, CEO, innogy Gas Storage & Presidency, GSE, in the lead up to his panel discussion at Flame in May on "Challenges & opportunities in today's market".
I truly believe that intensive use of gas storage in winter should be good for storage operators as much as it is for storage customers. It has not always been the case.
The calendar shows 31 January. I enjoy the warmth of my office, overlooking the romantic city of Prague covered with white snow. The afternoon temperature is minus 5 Celsius and YR promises this to stay as far as it can see.
A quick check of the GSE Transparency Platform: gas stock level in EU stands at 40% with still February, March and April ahead of gas consumers. In my country, the Czech Republic, we are down to 35% and today provide from storage about half of national daily consumption.
It all looks like a good season for gas people. Or does it?
The sales will sell more gas and recover some of the volume deficit of previous winters. Distribution and transmission will increase their variable part of revenues, provided the respective regulatory regimes allow for this. LNG terminals will improve their utilization. Storage customers who booked storage capacity last year and stored gas can now earn a good margin.
As for the gas storage operators, we are glad to see our customers happy, our infrastructure intensively used and our long term business prospects to raise. We only fear seasonal spreads on futures gas markets, a principal driver for the price of gas storage, to drop as a result of this.
How come? When gas storage is heavily used in winter, futures gas markets assume high gas injections next summer. Consequently, future summer gas prices rise and the difference between the price of gas next summer and next winter shrinks.
Perverse as it may seem it was already witnessed in past.
Lets see in a few months.
Want to hear what he has to say in a few months? Book your ticket to Flame now.