On the day when Europe and the G7 play the same score on the price cap for oil and gas, Enel CEO Francesco Starace says the most sensible thing: “We need to put a ceiling on the volatility of the Ttf index”, (the main virtual gas market in Europe) which by now “no longer reflects the tension between supply and demand for a long time, but has become” a relief valve on the percentage of geopolitical risks “.
The price above which European operators cannot buy should be set at around 90, 100 euros per megawatt hour. “But the price of gas is formed on the market – this is the reasoning of a trader who works for several clients – there is a risk that that asset may have that value or that it no longer exists”. The problem is that the Ttf index was chosen because it was thought that the price of long contracts with the Russians was too high and the European market would be more liquid and transparent. The price fluctuates frighteningly – it went from 20 euros per megawatt hour in May 2021 to 340 euros on Thursday, yesterday it was 240 euros. And if Russia really turns off the taps, the risk would be very real. «Today on the market many want to buy, like China and India, and few want to sell, because the risk of not having gas is very high. With so much demand and little supply, the price goes up ”, explains the trader. Il Giornale had launched the alarm on prices last October, before the war in Ukraine, when the energy expert Edoardo Beltrame had hypothesized a possible energy lockdown, given that with a price of 30 euros in September there were contracts futures maturing in March 2022 over 100 euros.
Then there is the issue of storage. The average gas consumption in cold weather – January, February – is over 400 million cubic meters per day. Italian storage, always in the coldest periods, could optimistically give 150. Without Russian gas, 250 million are missing. The price discounts this uncertainty. And who manages the storage in an emergency? What are the “strategic” stocks? Who decides who has gas and who doesn’t?
And the speculations? There are: not on the market price but on derivatives that serve to hedge the risk. Ecological Transition Minister Stefano Cingolani, after uttering the word “scam”, had announced a task force in Europe to negotiate the anti-speculation ceiling, but so far nothing has been seen. «When we build regasifiers, the price of gas will be more linked to the US and Chinese markets, but the theme is always the same. Ships loaded with liquid gas go to those who pay the most ». At what price? According to Goldman Sachs between 215-230 euros to 290 euros per megawatt hour, other than 100. Blame the “failure to reopen North Stream 1”, officially closed for maintenance, which “will reignite the uncertainty of the market.”
The clash remains on extra-profits: Mario Draghi’s government has decided to tax them by 25% but of the 20 billion that was expected, two or three will arrive. «Because some companies have reinvested the billions earned by making contracts at bargain prices to pick up customers at a loss – reveals a source close to a multi-utility in Northern Italy – So sooner or later wholesalers, suppliers and resellers will skip. And why were those who sell green energy at 50-60 cents, ten times the price of last year, excluded from extra-profits? Why does no one take care of it? ».
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