Gas prices start to converge across the continent
Much of the recent focus of the gas industry in Europe has been on large gas projects such as the Nabucco, South Stream and the Turkish stream gas pipelines. However, a number of less high profile developments have taken place over the last three years in Central and Eastern Europe (CEE) and these are likely to have a more profound and long-lasting effect on the region’s gas markets. These developments have increased the flexibility of gas flows across the region, reducing dependence on Russian gas and causing the price differentials between countries to narrow. Gas prices in the Czech Republic and Slovakia have already converged to German gas hub prices and this trend is expected to continue once the necessary infrastructure is installed and individual markets open up. In the meantime, European hub prices and the price of LNG in the Atlantic basin will increasingly be used as a ceiling for the price of Russian gas imports into Eastern Europe.
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