The president and CEO of Naturgy, Francisco Reynés, has warned that gas prices could rise sharply at the end of winter or beginning of spring due to the need to replenish reserve inventories without being able to count on the fuels that previously supplied Russia to all of Europe.
He said it this Friday at the meeting ‘The energy challenge’, organized by the Spanish Association of Managers (AED). Reynés recalled that last year they were still refilled using Russian gas, something that this year will no longer be possible, and has called to prevent “the mirage of January” -with the first 15 very hot days– blocking the vision of long term.
The manager has pointed out that gas is not only used for domestic use, but that most of it is used in industrial processes and for the generation of electricity. Reynés has lamented that “in energy, people have an opinion and do not have data”, and has highlighted the need to explain the reasons for the price increase as it has become, in his words, a “hot topic”.
The three factors that will say what happens with prices
Reynés has indicated that there are three factors that “are going to determine a lot” the evolution of gas prices in the coming months. The first is speculation, which he has assured affects the part of gas sales that occurs on a day-to-day basis, and which is 25% of the total, while the rest is subject to long-term contracts.
On the other hand, he recalled that Russia is the world’s leading gas producer and that “getting it out of the way” must have some impact, and finally he pointed out the recovery of activity in China, which in 2022 reduced its consumption by 20% to because of the restrictions due to the pandemic.
A reform is needed in the system
Francisco Reynés has assured that “it makes complete sense” to decouple the price of gas from the rest of the energy producers, but that it is not maintaining the appropriate exceptions as a way of operating. For this reason, he has called for a reform of the energy system to recognize “in a structural way” the differences between the different energy production systems.
He explained that gas is subject to variable costs, while renewable or nuclear energy “depends more” on the fixed investment costs that are made, since the raw material has a stable or zero price, in the case of renewable. Regarding a possible common energy system in the European Union, he has said that “it does not make sense” to want to jointly regulate something that has different conditions in each country.