The president of Naturgy, Francisco Reynés, yesterday demanded that the European authorities look for an alternative index to fix the price of gas. The manager explained that the one currently being used, the Dutch Title Transfer Facility (TTF) (which is at record highs), “no longer responds to the real supply and demand for gas, but is instead reflecting the physical restrictions unloading of ships with liquefied natural gas (LNG) in the ports of northern Europe and is dominated by speculation”.
Reynés, in a forum on energy organized by El Economista, stressed that the volume of derivative gas contracts traded in the TTF is 100 times greater than the volume of physical gas traded in the Dutch market, so it is far to reflect the reality of the market.
“We cannot get out of a market index to get into a non-index or a non-market, therefore we should seek or the meeting of the European Union should seek a reference liquid market that is built with supply and demand”, he pointed out. . The president of Naturgy also warned that “any decision that is made, any way to limit this indiscriminate rise in speculative aspects of this index must take into account that there is a financial market that it can affect a lot.”
Reynés’ opinion was seconded by Endesa’s CEO, José Bogas, who also acknowledged that “the price of the TTF is not representative and is subject to much speculation.”
The debate is not alien to the sensitivity of politicians in Brussels. Although there are no formal proposals at the moment, the European Commission is analyzing different alternatives to the current system of reference indices to set the price of gas. The exorbitant prices reached by gas that enters through pipelines have led to the fact that the TTF index “does not represent the conditions of the entire European Union” because it only reflects a part of the demand, explained community sources in the Belgian capital. Although the Commission’s technicians have valued the option of temporarily aligning the Asian market, they are more inclined to develop their own European mechanism that reflects the use of liquefied gas, while maintaining the TTF for the rest of the exchanges. “There is a lot of work to be done, it has to be an index that the market can use,” the sources said.
“Whatever the final solution, I am convinced that eliminating speculation and providing certainty will allow the gas market to stop being news for the bad, in this case because of runaway prices, and become news for the good, which is that there are many industries that thanks to gas are competitive. Let’s think big and think together”, requested the president of Naturgy.
Beyond the current situation and the impact of the war in Ukraine, the gas problem has a deeper dimension. At least, this is what Repsol’s CEO, Josu Jon Imaz, pointed out yesterday at the same meeting, who said that part of the rise in gas prices is due to a “poor design of the energy transition process, which is being carried out badly in Europe and in Spain”.
Imaz recalled that in Spain the Climate Change law prohibited gas exploration in the country, when there is and there are companies that have to pay dearly for it. For Imaz, an “ideological” energy transition has been made in Europe, in which investment in certain energy sources has been rejected and energy dependence has increased, and the consequence has been that consumers pay more for energy and CO2increases.
