(Bloomberg) — Europe’s homes and businesses are set to face a difficult winter because of record natural gas prices, and cold snaps will only make it worse, according to supplier OMV AG.
Gas prices are rallying across the world because of soaring demand after the pandemic and utilities across the region are hiking rates just ahead of winter. Europe has been hit particularly hard because many tankers with the fuel sail to Asia instead where prices are even higher. Russia, Europe’s biggest supplier, is also facing a crunch of its own and is holding back deliveries.
OMV’s Chief Executive Officer Alfred Stern said the Austrian company is still trying to catch up from last year’s deep chill and storage levels are way below average for this time of year.
“We’ve been running behind the storage delay all summer,” he said late Thursday at a briefing in Vienna. “It will now depend on how cold this winter is.”
Some relief could come through the controversial Nord Stream 2 pipeline from Russia to Germany, which OMV helped to finance. The current crunch shows why such infrastructure projects are critical, Stern said.
“Companies like OMV that have long-term relationships have to maintain them,” he said.
Russian Energy Minister Nikolay Shulginov said Thursday it’s possible that Nord Stream 2 will start sending more gas to Europe soon as the pipeline is almost complete.
Stern Also Said:
The company is retooling its strategy and will publish a revised outlook during the first quarter of 2022. That document may include new guidance on whether OMV invests in Gazprom’s Achimov 4A/5A gas fields.Stern expects major changes to unfold across his entire industry over the next decade: “In 10 years there won’t be a single oil and gas company that looks like it does now.”OMV’s decision to pivot toward chemicals and away from oil and gas has given the company a head-start in the energy transition. Half the profit is already being generated from its chemicals and materials division. Production will remain below 500,000 barrels of oil a day equivalent.
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