S&P Global Market Intelligence

European Horizons

Price Tremors Threaten Europe's Gas Bridge

Key Takeaways

This year's steep rise in gas prices caught Europe by surprise, highlighting the region's mounting vulnerability to weather conditions, and increasing competition from other regions for LNG cargoes amid tight supply.
S&P Global Ratings expect rebalancing the European gas market will take time because certain key drivers are structural, and they believe that Nord Stream 2 alone cannot fill the gap.
With the EU currently debating the role of gas in the Green Taxonomy and likely new decarbonization pledges at COP 26 in November, extremely volatile gas prices raise questions about how well gas can support security of supply during the energy transition, and at what cost.
S&P Global Ratings believe that, ultimately, it may become even more difficult for Europe to reconcile its
increasing reliance on gas imports with tightening environmental restrictions

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