Bloomberg: Goldman Sees EU Using More Gas for Power as Short-Lived
Europe’s return to favoring natural gas for power generation for the first time in almost three years will be short-lived as Russian and Norwegian gas imports will be needed for winter, according to Goldman Sachs Group Inc.
An excess of gas in storage is driving “efficient” power plants in the U.K. to use more of the fuel at the expense of coal, the bank said in a report dated yesterday. Power plants in the U.K., Europe’s biggest gas market, can consume supplementary inventories before the winter if prices for the fuel are at an average discount of 5 pence a therm (9 cents a million British thermal units) to coal, it said.
Price-induced coal to gas switching is “likely to only be a summer phenomenon in Europe,” analysts including London-based Daniel Quigley said in the report. “Beyond the summer, we continue to expect European gas to return to a 2013-like dynamic, requiring relatively high imports from Russia and Norway to compensate for 11 billion cubic meters a year of production cuts from the Dutch Groningen gas field.”