The market of natural gas in 2021 was marked by further unprecedented price increases.
After a slump in the market caused by a significant reduction in demand through a global pandemic situation, there was a marked rebound. A number of factors contributed to this.
Firstly, the industry, coming back from suspension, unexpectedly increased its consumption to an extent that the supply side, having gone into temporary sleep mode, was unable to balance. The second major factor was the filling level of storage facilities on the old continent. This was at a very low level and, due to the significant current consumption of gas and the relatively long heating season, it was not possible to fill up storage facilities effectively and quickly. This resulted in entering another winter period with a very low filling level. Filling ended at the end of September at 76% – well below the five-year average.
The supply side (production) was not able to recover from the pandemic as effectively as the demand side. This was due to a number of factors, including the blockage of the Panama Canal by record frosts in Texas in February, which effectively limited LNG production and shipments to Europe and Asia; the blockage of the Suez Canal translating into a reduction in all transit from Qatar, Asia and Australia to Europe; and the drought in Brazil, whose hydro-based power industry suddenly increased its demand for LNG to offset missing electricity generation. In addition, there was the failure of an LNG processing and shipping base in Australia (Gorgon LNG accounts for almost 5% of global production) and an unexpectedly large number of failures at transmission and production stations in Norway. The cold weather in Asia and on the Japanese islands translated into huge competition for LNG for Europe – which in turn translated directly into higher prices. All this has had a direct impact on global supply and production channels. Also, the conflict with Russia translated into reduced imports to Europe from the Russian direction, fuelling unrest in the markets.
Increases in natural gas prices are also influenced by quotations of CO2 emission allowances, and these rose very significantly in 2021 – from a level of EUR 30/t to over EUR 90/t. This significantly steered the energy and fuel markets, including the natural gas market.
At the same time, according to the monitoring of wholesale gas markets by the (EU Agency for the Cooperation of Regulators), the European gas system showed its flexibility in 2021 and wholesale markets its resilience. Moreover, the gas infrastructure is so developed that there are no longer bottlenecks in the system that impede flows. At the same time, ACER noted that even if no major supply disruptions were recorded, the degree of security fell as a result of lower imports of LNG and via pipelines, and lower storage stocks. (source: wysokienapiecie.pl)
According to Gaz-System S.A., the volume of gas transported in Poland in 2021 increased to 217.4 TWh against 205.1 TWh in 2020.
The volume of natural gas trading on POLPX amounted to 180.8 TWh. This is the best result in the history of trading in this commodity on the POLPX, with an increase by as much as 19.6 percent- against 2020. Record trading volumes were recorded both on the spot market (28.6 TWh) and on the gas forward market (152.2 TWh). The weighted average price on the DAM&IDMg in 2021 was 226.29 PLN/MWh, which is up by 169.15 PLN/MWh against 2020. On the futures market, the weighted average price for a contract with delivery in 2022 (GAS_BASE_Y-22) was 176.34 PLN/MWh in 2021, i.e. by 107.19 PLN/MWh more than the price of the corresponding contract GAS_BASE_Y-21 in 2020. (Source: POLPX)
Trade organisations and institutions:
- Organization of the Polish Exploration and Production Industry
- Polish LNG