BAKU, Azerbaijan, Nov.26
By Leman Zeynalova – Trend:
Locking argument regarding long-term gas contracts is not relevant, Eurogas President and Executive Vice President of ENGIE, Didier Holleaux told Trend.
Locking in means entering into an energy contract where the supply rate of natural gas is fixed, or remains the same over time. That will ensure that you pay the same supply rate for your energy use from month to month. This means your supply rate won’t be affected when the market price of natural gas shifts over the course of your contract term.
When you lock in natural gas prices, you get the benefit of having a plan with a stable rate, or a fixed-rate plan, with a more predictable natural gas bill each month. You may even be able to find contracts with terms up to two years. But the longer the term you commit to, the more you’ll want to make sure you’re entering the deal when prices are low. It pays to know the best time to lock in natural gas prices.
“Well as soon as you choose to have a market on energy like gas power and so on, you cannot really say that the fact that the prices are high when the supply to demand balance is a tight sign that the market is not functioning. In fact, ACER just last year assessed the market and said that the gas market is functioning. The question is, how do you avoid the worst consequences of this volatility and very high prices for the most sensitive customers? And that's really the issue we need to address,” said Holleaux.
He said there is a general consensus that natural gas will be needed until 2045.
“So you have plenty of time to depreciate amortise your assets before this date, and partly because some of the assets we are speaking of, like compressed natural gas station, will be amortised within five years or ten years. So this locking argument is not really relevant. Second, a lot of our gas assets could be reproposed for biomethane or for hydrogen and therefore they will not be stranded. So I don't take the locking argument as a serious argument against long term commitment be it contract or investment,” Eurogas president explained.
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