Norway's Equinor sees high European gas prices likely into 2023: official

Norway's state-controlled Equinor believes European gas prices will likely stay high into 2023 given the current very low levels of storage and concerns over Russian gas supply, a senior company official said Feb. 9.

Speaking to analysts after the company released its Q4 earnings, Equinor's executive vice president for marketing, Irene Rummelhoff, said the company was "quite bullish" in the near term.

"It is basically all about Russia these days. They're not sending the volumes we expected. And there is a lot of nervousness in the market around Nord Stream 2, the Ukraine crisis, etc.," Rummelhoff said.

She said that there had been evidence of LNG being diverted from Asia as a result of demand destruction, which had helped to soften European gas prices a little bit.

"But notably, none of that LNG that came here went into storage," she said, pointing to the need to restock over the summer.

European gas stocks are currently just 35% full heading into the final months of the heating season, according to Gas Infrastructure Europe.

The low level of stock build-out last summer -- European storage reached a peak of just 77% full by October -- has seen stocks drawn down to historically very low levels.

The low inventory levels mean Europe will need to inject some 80 Bcm over the summer into storage sites, Rummelhoff said.

"It's a big number. So that will keep up prices over the summer and well into the winter and probably also into 2023," she said.

European gas prices remain at sustained highs, having hit all-time record levels in December on winter supply concerns.

The TTF day-ahead price hit a record high of Eur182.78/MWh on Dec. 21, an increase of 985% year on year, according to S&P Global Platts price assessments.

Prices have cooled since, though they remain high, with the TTF day-ahead contract assessed Feb. 8 at Eur75.80/MWh, still a year-on-year increase of 265%.