GAS PRICE. Vladimir Putin has announced that countries that purchase Russian gas and are deemed “hostile” will have to pay for Russian gas in rubles. What are the consequences, is France targeted? Here are some answers.
[Mis à jour le 1er avril 2022 à 12h19] New threat from Vladimir Putin on Russian gas supplies. After a relative lull, the Russian president once again raised the specter of a supply cut. Vladimir Poutine underlined Thursday March 30 that the payments should be carried out in rubles as of Friday April 1 for the countries considered “unfriendly” or “hostile”. Without payment in rubles, the ex-KGB officer threatens to break the contracts and therefore the gas supply. However, the European Union remains 40% dependent on Russian gas to secure its gas supply, with large disparities existing between EU member countries, France being 17% dependent against 55% for Germany .
Such a threat, even if it remains difficult to carry out for the Russian economy, has another impact: on prices, which threaten to rise again at the end of winter, precisely at the time when many States must renew their stocks. Europe’s dependence on Russian gas has been a central element of the crisis that has pitted the Kremlin against Brussels since the start of the war in Ukraine. Prime Minister Jean Castex is considering going further in the medium term: the exit from Russian oil and gas by the 2027 deadline, as revealed during the presentation of the resilience plan on Wednesday March 16, where the radical solution was considered. : “get out of Russian gas and oil by 2027” then “securing our gas supply for winter 2023“. To achieve this ambitious objective, France will also have to reduce total gas consumption in France, decarbonize our transport and our industry in general, but also to develop renewable energies, particularly in biogas or electricity.
Soaring gas prices in the land of the tsars in recent weeks, peaking at 345 euros the megawatt hour cast serious doubt on supplies and prices in France. It is clear that this increase has not yet been passed on to household electricity bills. After a price explosion, the market seems to calm down but remains very far from the average 50 euros observed in November 2021. The French should be spared from any increase thanks to the tariff shield.
The Prime Minister John Castex had already announced that the tariff shield used to freeze gas prices would be extended until the end of 2022, a device confirmed by the Minister of the Economy Bruno Le Maire but which must be officially put in place via the “resilience plan” expected mid-March. Already recorded until June 30, the French will therefore be protected beyond this date.
To justify this decision, Jean Castex explained that the decline in prices will be slower than expected. The tenant of Matignon has however ruled out, for the time being, any measure leading to a reduction in taxation. But concretely, what does this measure mean for consumers? Gas prices will, of course, be frozen until the end of the year. On the other hand, from the beginning of 2023, the price of gas will cost consumers a little more than market prices, so that the sums paid in addition during the winter by the operators are recovered. Since the beginning of the year, the regulated price has jumped by more than 50% since January. There was urgency as the mercury prepares to descend.
The price of natural gas in Europe is soaring. The TTF rating, the Dutch reference in Europe, even reached an all-time high, 345 euros per megawatt hour, Tuesday, March 8, 2022. It has since fallen but remains well above the usual standards. This is the first visible consequence of the war in Ukraine. So, is there a real risk of rising prices in France? For now, not really thanks to the introduction of the tariff shield by the executive. Purchases of energy products could be spared, there should not be a shortage either in France.
However, the latest media releases from the government are not very reassuring. “We’re all gonna have to make an effort, we’re entering a new worlde” affirmed the Minister of the Economy, Bruno the Mayor beginning of March 2022. Paying attention to his energy consumption in the future is the wish of the Bercy tenant. Lower the temperature by 1 degree at home? This is one of the possibilities mentioned by Bruno Le Maire who calls on the French to make an effort. The International Energy Agency points out that a drop of one degree represents 7% savings per year.
Also, supply could be a problem in the future. Not this winter, no, but this summer! The filling of storage which takes place in the spring for the summer could not be carried out correctly if Vladimir Putin were to turn off the gas tap, or if Europe decided to stop importing Russian gas. Another double-edged decision, as with the exclusion of Russian banks from Swift.
The exclusion of Russia from the Swift banking transaction processing system also cast serious doubt on the supply and prices of raw materials and gas in France and Europe. In all likelihood, this will not be the case for gas prices in France. Indeed, purchases of energy products may not be impacted. Significant example, the subsidiary of the Societe Generale, Rosbankwhich officially escapes the exclusion of Swift by European countries, it is not part of the 7 Russian banks already banned. Excellent news for France and Europe in the face of the risk involved.
Today, 40% of European gas is imported from Russia. Be careful, however, only 17% of French gas comes from Russia, there is the big difference with ultra-dependent countries like Germany. Across the Rhine, our neighbors are dependent from 55% to 60% towards the Russia in terms of gas imports. Also, the pipeline North Stream 2 has just been completed between Russia and Germany. German Chancellor Olaf Scholz has already suspended the authorization for this gas pipeline. Germany finds itself trapped, and could be in great difficulty in the event of a cold snap.
If Russia decides to no longer supply France with gas, France will still have the possibility of supplying itself with Norway (36% gas imported into France) or Algeria (8% gas imported into France), France’s other gas trading partners. Please note that these countries have much more limited supply capacities than Russia. This import of liquefied gas from Norway and Algeria remains, today, the most serious and interesting track if Russia were to stop supplying Europe.
In France, there is no reason to worry, for the time being. Firstly, with Italy, France is the best European student in terms of gas storage according to The Parisian. This greatly protects us, initially, from the risk of lack of supply and variations in supply. Secondly, France has three LNG terminals: Montoir-de-Bretagne (Loire-Atlantique), Fos-sur-Mer (Bouches-du-Rhône) and Dunkirk (North). A considerable advantage which should make it possible to supply French customers with peace of mind in the coming weeks.
Remember that in France, suppliers are required to store gas for several months, in layers. And that’s good news, the French tablecloths are almost full. This covers 1/4 of the annual consumption. The difficulty will be to restock them at the end of winter. Otherwise, major difficulties are to be expected for next winter.
The consumer is facing a veritable spike in gas prices in recent months. For households using gas as a means of cooking, but also for heating, the successive increases will seriously affect the end-of-year budget. The Energy Regulatory Commission (CRE) has indeed announced a mess of increases in recent months, these increases affecting the regulated gas prices charged by Engie. They act indirectly on market prices. We summarize what has happened in recent months:
- +10% in July 2021
- +5% in August 2021
- +8.7% in September 2021
- +12.6% in October 2021
- +15% announced on November 1, 2021.
The government recently announced the payment of an additional energy check of 100 euros for the 5.8 million households benefiting from the energy check. Payment is scheduled for December. To find out more, see our dedicated article:
Are you still dependent on regulated gas prices? This price increase is not the only reason to look elsewhere! Since the Energy and Climate law adopted in 2019, regulated tariffs are gradually disappearing. Engie has ceased to market new contracts at regulated sales tariffs (TRV), since November 2019, which means that you will soon change your contract. If you have an Engie contract, don’t panic. It remains valid until June 30, 2023. In this context of crisis, are you studying the possibility of changing your energy supplier more seriously? Consult our dedicated file without further delay:
Be careful, however, since if you have not changed your contract yourself, you will see your contract automatically switch to a market offer from Engie, from July 1, 2023. If you change provider, find out on the website of the national energy ombudsman, herewhich offers a comparator of offers to find the formula that meets your consumption needs.
Do you want to know the price of gas near you? Here are some examples: gas prices in Paris, Marseille, Lyon, Rennes, Nantes, or even Lille. You can also search for the city of your choice using the search bar above.