The Chairman and CEO of Naturgy, Francisco Reynés, predicted this Friday that “months and years of high (energy) prices” lie ahead, after a relief in bills that can be explained by the fact that it is taking so long for the cold weather to arrive, a “temporary and not structural” factor that has minimised demand.
“To return to the prices of 2021 is still some time away”, said Reynés at the inaugural conference of the conference organised annually by the Association of Economists of Catalonia, which was held on this occasion at the Intercontinental Hotel in Barcelona.
The top executive of Naturgy indicated that the current lower energy prices have to do with lower demand, since it is warmer than usual at this time of year, and with the fact that reserves are full, largely due to the objective set within the European Union (EU) of reaching at least 85% full by the end of the year: “As it has not been cold, no gas has come out”, he summarised.
But this “temporary” situation will change as soon as reserves start to fall and have to be refilled: the number of LNG tankers in the water is “higher than it has ever been in the last 20 years”, which has led to a 15-fold increase in their cost, a rise that will be reflected in consumer bills.
In addition, the Russian invasion of Ukraine, which has forced the EU to set itself the aforementioned minimum filling level of 85%, has had one of its consequences in the “attack” suffered by the Nord Stream 1 pipeline, with the capacity to transport up to 55 bcm (billions of cubic metres) annually, rendering useless a supply route that in any case had been at a standstill due to the war.
EUROPEAN COORDINATION HAS BEEN LACKING
Reynés, who regretted the proliferation of opinions on the energy market without sufficient knowledge of the cause, stressed that the current environment is characterised by “volatility and prices at historic highs”.
In the case of Europe, he pointed out that it produces 5% of natural gas while it consumes 15% (three times more), which adds to the fact that “everyone here has waged war on their own side”, so that “there are different energy mixes and origins”.
While Germany has opted for coal and is reducing its nuclear dependence, France relies on its nuclear power stations, Italy has concentrated on gas turbines and Spain has managed to reduce CO2 emissions in energy generation by 50%.
For Reynés, who said that Naturgy is obsessed with diversifying its supply funds, the EU should look at whether its climate ambitions, as well as making “sense”, have a notable “impact” in a global environment that does not set such restrictive conditions.
In the specific case of Spain, he said that “one of the main bottlenecks” in the transition to renewable energies is the slow processing of installation permits and environmental impact statements, which “are much slower than desirable”.
In fact, he recalled that Naturgy’s strategic plan foresees investments of 14,000 million in this area until 2025: “But this requires time and money”, he added.
After stressing that the development of biomethane is one of the elements to which Naturgy pays attention, he defended that the ecological transition “can be done and is necessary”, but it needs “time, investment and realism”.