Black Week for Gas Prices in Europe. New Crisis Rumored

The price of gas futures for the supply of blue fuel in July set a new record last Friday, rising to 49.57 euros per megawatt-hour of energy (almost +30% compared to the previous close).

Gas futures price for July delivery on the market ICE Futures Europe during the session on Thursday, June 15, increased by almost 30%, reaching a peak of 49.57 euros per megawatt-hour, which is just over $564 per thousand cubic meters. By the end of trading, growth had slowed to 2.6%, and the price had fallen to 39.305 euros per megawatt-hour, or $451 per thousand cubic meters.

ICE Futures Europe is the largest regulated energy futures exchange in Europe and the second largest in the world. It offers futures contracts and options on benchmark energy and emissions. ICE operates in several markets around the world. It accounts for over 50% of global futures trading in crude and refined oil, and its benchmark contract – ICE Brent Crude – forecasts the price of two-thirds of the world’s physical oil.

On the Dutch benchmark TTF, gas prices also double in just 10 trading days. Also, last Thursday, the trading price of the European benchmark TTF security rose by 27% to 49.50 euros per megawatt-hour, the highest level recorded since the beginning of April. This happened after the TTF index fell to a two-year low of just 23 euros per megawatt-hour in early June.

Natalya Milchakova, chief analyst at Freedom, explained to RBC Finance Global, “The Netherlands will listen to the initiative of environmentalists and may soon announce the closure of the eurozone’s largest gas field in Groningen.”Europe’s largest field, which in theory could make the old continent independent of Russian gas, can no longer be used because it “causes earthquakes.” According to Bloomberg sources, an official decision to stop production on October 1, 2023 could be made at a meeting of the Dutch Council of Ministers at the end of June.

“Previously,” wrote Bloomberg, “the Netherlands planned to stop production in Groningen no later than October 2024, depending on the geopolitical situation, but due to the consequences such as earthquakes, the deadline could be moved much earlier. At the same time, the decision to stop production in Groningen may be reconsidered in the event of a new energy crisis or a particularly harsh winter of 2023-2024. In this case, production can be resumed in just two weeks.”

Dangerous seismic activity associated with the operation of the Groningen field reached its peak in 2012 when a 3.6-degree earthquake struck, causing thousands of property damage claims. More than 3,300 buildings have been demolished since 2012, until two years later the Dutch government imposed severe restrictions on the commercial operation of the fields.

Since the start of production in 1963, the Groningen field has been a key source of natural gas for much of Western Europe, as well as a pillar of the Dutch public finances. However, over the past decade, gas production in Groningen has declined significantly. Currently, production is at a minimum level. While in 2013 production reached 54 billion cubic meters per year, in 2018 it fell to 21.6 billion, and in 2022 to just 4.5 billion cubic meters.

So, talks in Europe about a new energy crisis resumed. “Deep price fluctuations caused by a series of minor gas outages in Norway and the expected closure of a major production site in the Netherlands gave an idea of how vulnerable the market is to any threat of gas outages in the region,” wrote Violetta Silvestri, analyst from