GAS PRICE. The war in Ukraine should have serious consequences for Europe and France. Dependent on its imports of Russian gas, Europe might bear the brunt of soaring gas prices, or even a shortage.
[Mis à jour le 24 février 2021 à 11h18] War is declared in Ukraine. Since Thursday, February 24, many Ukrainian cities have been hit hard by the attacks and bombings dictated by Moscow and Vladimir Putin. The launch of a military operation on the whole territory, including Kiev, is cause for concern in Europe. Actions that might and should have serious consequences on energy prices, and in particular gas in France. Stake ? The supply of gas in the event of a shortage, and the price to pay to be able to benefit from it.
Russia is 40% gas imports from the European Union. Even if the master of the Kremlin has announced that he will continue his gas exports, he might turn off the tap at any time. In any case, the bill is likely to be steep in France in the coming months. The market would have already taken around 10% since the first Russian bombardments in the Donbass. France is not the worst off, of course, but the danger weighs and no one should be spared. Our German neighbors, more than 50% dependent on Russian gas, might quickly find themselves in an extremely delicate situation.
On the executive side, we seek to reassure. Bruno Le Maire hammered it on the set of BFM TV this Wednesday, February 23. A single objective, to protect the French once morest the increase in energy prices: “We have made a commitment to freeze gas prices, this commitment will be respected for individuals. This freeze runs until the summer of 2022 If ever it has to be extended because we are seeing an explosion in the price of gas, it seems essential to me to do so.”
Today, 40% of European gas is imported from Russia. Be careful, however, only 17% of French gas comes from Russia, there is the big difference with ultra-dependent countries like Germany. Across the Rhine, our neighbors are 55% dependent on Russia and in terms of gas imports. Also, the North Stream 2 pipeline has just been completed between Russia and Germany. German Chancellor Olaf Scholz has already suspended the authorization for this gas pipeline. Germany finds itself trapped, and might be in great difficulty in the event of a cold snap.
If Russia decides to no longer supply France with gas, France will still have the possibility of obtaining supplies from Norway (36% of the gas imported into France) or Algeria (8% of the gas imported into France), other trading partners of France on gas. Please note that these countries have much more limited supply capacities than Russia. This import of liquefied gas from Norway and Algeria remains, today, the most serious and interesting track if Russia were to stop supplying Europe.
Remember that in France, suppliers are required to store gas for several months, in layers. And that’s good news, the French tablecloths are almost full. This covers 1/4 of the annual consumption. The difficulty will be to restock them at the end of winter. Otherwise, major difficulties are to be expected for next winter.
The price of natural gas in Europe is already soaring to reach 108 euros per megawatt hour. First visible consequence of the war in Ukraine. So, is there a real risk of rising prices in France? Absolutely. There is a good chance that gas will be much more expensive in the weeks to come, but there should not be a lack of gas, for the moment, a hint of good news in this ambient slump.
Important, the French remain protected by the tariff shield introduced by the Government. What regarding companies? These might bear the brunt of the effects of the war in Ukraine. Adverse effects that would immediately impact their competitiveness.
Presented as the European reference price for gas, the Dutch TTF has experienced a real explosion since the beginning of this week. Since Monday, contracts have soared by 50%. A bad omen before a potential rise in gas prices in France.
In France, there is no reason to worry, for the time being. Firstly, with Italy, France is the best European student in terms of gas storage according to The Parisian. This greatly protects us, initially, from the risk of lack of supply and variations in supply. Secondly, France has three LNG terminals: Montoir-de-Bretagne (Loire-Atlantique), Fos-sur-Mer (Bouches-du-Rhône) and Dunkirk (North). A considerable advantage which should make it possible to supply French customers with peace of mind in the coming weeks.
Good news for households that still depend today on regulated gas prices? In addition to the creation of an inflation allowance instead of a fuel check, the Prime Minister announced that the tariff shield used to freeze gas prices will be extended until the end of 2022, instead of April.
To justify this decision, Jean Castex explained that the decline in prices will be slower than expected. The tenant of Matignon has however ruled out, for the time being, any measure leading to a reduction in taxation. But concretely, what does this measure mean for consumers? Gas prices will, of course, be frozen until the end of the year next year. On the other hand, from the beginning of 2023, the price of gas will cost consumers a little more than market prices, so that the sums paid in addition during the winter by the operators are recovered. Since the beginning of the year, the regulated price has jumped by more than 50% since January. There was urgency as the mercury prepares to descend.
The consumer is facing a veritable spike in gas prices in recent months. For households using gas as a means of cooking, but also for heating, the successive increases will seriously affect the end-of-year budget. The Energy Regulatory Commission (CRE) has indeed announced a mess of increases in recent months, these increases affecting the regulated gas prices charged by Engie. They act indirectly on market prices. We summarize what has happened in recent months:
- +10% in July 2021
- +5% in August 2021
- +8.7% in September 2021
- +12.6% in October 2021
- +15% announced on November 1, 2021.
The government recently announced the payment of an additional energy check of 100 euros for the 5.8 million households benefiting from the energy check. Payment is scheduled for December. To find out more, see our dedicated article:
Are you still dependent on regulated gas prices? This price increase is not the only reason to look elsewhere! Since the Energy and Climate law adopted in 2019, regulated tariffs are gradually disappearing. Engie has ceased to market new contracts at regulated sales tariffs (TRV), since November 2019, which means that you will soon change your contract. If you have an Engie contract, don’t panic. It remains valid until June 30, 2023. In this context of crisis, are you studying the possibility of changing your energy supplier more seriously? Consult our dedicated file without further delay:
Be careful, however, since if you have not changed your contract yourself, you will see your contract automatically switch to a market offer from Engie, from July 1, 2023. If you change supplier, get information on the site of the national energy ombudsman, herewhich offers a comparator of offers to find the formula that meets your consumption needs.
