The first quarter of the year typically sees the extraction of stored gas, with the depots gradually refilled by the summer months. This is explained by the fact that the flow of gas is constant in the pipeline and the reserves are used to compensate seasonal changes in demand. In the first two months of 2011, traders acted no differently, however, they kept the reserve taps open much longer than usual.

The storage division of natural gas wholesaler E.ON Földgáz Trade has a capacity of four billion cubic meters of commercial storage space. As István Kutas, E.ON’s media relations and PR manager told the BBJ, there is currently one billion cubic meters stored. Yet, he was quick to point out that there is nothing unusual about the depletion, which is “business as usual”.

Kutas said the tapped volume is bigger than in other years, something that can probably be linked to high global prices. He also stressed that the depots will be refilled from Russian imports by the summer, same as every year, regardless of rising prices.

According to the latest foreign trade figures released by the Central Statistical Office (KSH), Hungary’s energy imports dropped 5% year-on-year in January-February. In the case of natural and artificial gas, the lapse was 40%.
This also stipulates that the missing amounts came from reserves, since consumption figures by the Hungarian Energy Office (MEH), show that consumption in January was only slightly lower a year before, while February figures were practically the same.

 

Set to rise

 

Last year, recovering economies generated an unprecedented 7.3% spike in global natural gas production, which resulted in hiking prices, and also well-reflected in Hungary’s energy spending.

Despite the dropping volume of imported energy, overall spending rose to HUF 370.8 billion in the January-February period of 2011 from HUF 297.8 billion in the corresponding months of the year before, KSH statistics show.

As for natural and artificial gas the volume drop was also paired with a value slump of 18% or HUF 25 billion, a discrepancy KSH attributed to changes in import prices.

The hike in prices is set to continue as economic recovery continues, according to market players. For example, Russian energy giant Gazprom, which posted a 24% increase in profits to $35 billion last year, expects massive price increases by the end of the year.

The company’s CEO Alexei Miller said his company was supplying Europe at a price level of $306 per 1,000 cubic meters, which he estimated had already risen to $352 for February supplies. Miller expects that by the end of the year, the expense level could rise to $500 per 1,000 cubic meters, but even that wouldn’t be the limit.

Miller noted Russian exports to Europe increased by 30% year-on-year in the first quarter of 2011 and the country is planning to export 151.5 billion cubic meters altogether this year to the continent over the 139 billion supplied last year.

“European gas market breaks all records,” he added.