Energy firm chief: Winter crisis in Europe and the Baltics could unfold faster than in 2022
Roberts Samtiņš, head of the "AJ Power" group of companies, warns that five simultaneous factors could trigger an energy crisis in Europe and the Baltics. There is no physical shortage of gas or electricity for now, but the risk of price rises is high.
An energy crisis could develop in Europe and the Baltic states this winter, and it could unfold faster than in 2022, Roberts Samtiņš, head of the energy group "AJ Power", told the news agency LETA. He names five factors that are influencing energy prices at the same time and says they could affect Latvian gas and electricity consumers as well.
Five risk factors
First, European Union gas storage was about 75% full at the end of October. That is 15 percentage points below the five-year average and the lowest level since records began in 2011. In Germany, filling stands at about 62%.
Second, the Strait of Hormuz remains effectively closed to liquefied natural gas (LNG) tankers. Before the war with Iran, around 93 cargoes were sent each month from Qatar and the United Arab Emirates; in September and October the figure was only 27 per month, roughly 30% of the usual volume. US President Donald Trump has not ruled out expanding strikes on Iran after the 3 November elections.
Third, Europe competes with Asia for each LNG cargo, with Japan, South Korea and China as solvent buyers. Fourth, forecasting models point to a possible very early collapse of the polar vortex in early November, which from mid-November could raise the risk of cold and windless spells. Fifth, the risk of provocations against Baltic energy infrastructure is growing.
Prices and the situation in Latvia
The gas price on the TTF exchange rose in two weeks from about 88 to 103 euros per MWh, the highest level in almost four years. The December delivery contract price has risen 84% in three months. For comparison, in 2022 gas in Germany reached 340 euros per MWh and electricity 670 euros per MWh. Current futures prices remain well below those peaks, so companies still have a chance to reduce their risks.
On 30 October, the Inčukalns storage facility held 12.46 TWh of gas, including 4.03 TWh of regional security reserve. That is 15% less than a year earlier. The Klaipėda and Inkoo LNG terminals are operating stably. Samtiņš stresses that a price rise is not guaranteed: if shipping through Hormuz returns to normal or the winter is warm and windy, prices may fall.
