Analysts split on whether gas prices will remain high
Liquefied natural gas terminal (LNG), at Yangshan Deepwater Port of Shanghai, China on Saturday Oct. 9, 2021
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It has not even been winter yet, gas prices have already soared to record highs in EuropeAsia, on supply worries several energy suppliers in the U.K. have collapsed.
CNBC analysts stated that the supply of natural gas is expected to increase slowly over time, but then jump in 2025.
Analysts are split on the question of whether supply will outstrip demand in the years ahead.
Richard Gorry (managing director at JBC Energy Asia) said that the current gas crisis is likely to repeat itself.
“This will be a crisis that is reoccurring over the next three or four years — simply because we don’t have a lot of new natural gas supply coming into the market in that period,” he told CNBC’s “Capital Connection”Mid-October
“Though the circumstances may have changed by 2025, I believe we still have several years in which we can expect high energy prices,” said he.
James Whistler (global head of energy derivatives, shipbroking company Simpson Spence Young) said that prices won’t remain as high after this winter.
“Are you going to have an energy crisis for three more years?” He told CNBC that “absolutely not”, “Street Signs Asia”On Wednesday
“This is a short-term issue … come March or April next year, we’ll see much more reasonable prices starting to come through again,” he said.
Gorry stated that the demand for gas is rising “quite rapidly” because countries are trying to switch from oil and coal to more sustainable energy sources. He said that this means there isn’t enough gas in the world and the market will become very tight over the next three-years.
Natural gas pollutes less than traditional fuels.
He predicted the crisis would end in February or March. However, market conditions will change when the winter season arrives and the demand for goods rises.
Even though a gas shortage won’t cause another energy crisis it can lead to an increase in oil and coal consumption, according to Gavin Thompson of Wood Mackenzie Asia Pacific Vice Chairman of Energy.
The company purchased electricity from the U.K. fired up an old coal power plant in September.
Thompson predicts that gas “features prominently” as part of the transition to a cleaner mix. Thompson said however that gas producers remain concerned about long-term supply and could be underinvesting.
He warned that if producers fail to invest sufficiently, buyers could return to traditional fuels.
“That’s a big risk because … slowing the pace of the energy transition will make 2030 targets, 2050 targets really, really difficult to meet,” he said.
Analysts predict that the gas supply will meet future demand.
Citi Research’s head of energy strategy, Anthony Yuen said that gas supplies are “getting better.” He pointed out that several major terminals for exporting liquefied natural gases are now online, and the production in Europe and Russia is expected to rise.
The LNG export facility cools natural gas to a liquid so it can travel on ships to areas that are not able or unable receive it by pipeline.
The crunch this year was a result of a “confluence of factors” — from low hydro power generation in Latin AmericaHe said that there was a “very strong” energy demand.
He stated that the “really high” prices period could lead to a slowerdown in demand growth and asked where there would be enough demand to exceed supply.
However, he did not rule out the possibility of another energy crisis.
CNBC interviewed him via video and he said that “Never Say Never” was his motto. It depends partly on [the]Weather. However, if you consider a few supply-demand factors, it will probably be much more favorable.
Yuen predicted that prices would trend downwards after this winter. Then, in 2025, when more LNG export terminals go online, they will fall “much further”.
— CNBC’s Sam Meredith and Chloe Taylor contributed to this report.