The turbulent times in the energy markets have not calmed down. At the time of writing, in late August 2022, the price of gas on the Title Transfer Facility (TTF) exceeded the threshold of €300/MWh. Electricity prices in European markets have also reached staggering levels. On the day-ahead market of the Croatian Power Exchange (CROPEX), for the delivery date of 26 August 2022, the following prices were recorded: Base → €708.08/MWh and Peak → €748.22/MWh. Therefore, the following question arises: Is the period of excessive prices in the global energy markets coming to an end? Answering the question with optimism is difficult because the situation clearly entrails devastating trends in a distorted market, triggering a general crisis with rising prices for many goods and services and ultimately leading to worldwide inflation. Unfortunately, many uncertainties (detailed in the reviews of editors in past issues of the Plin (Gas) magazine have yet to be mitigated and will, therefore, continue to affect energy prices, making any forecasting unreliable.
In recent months, we have witnessed the implementation of numerous measures by the authorities in countries around the world to alleviate the burden of enormous energy prices for citizens and economic operators. Given the recent difficult situation, it is likely that the policy will continue. Nonetheless, any package of measures should take into account that strong interventions in energy prices can be counter-effective, and the need to reduce energy consumption and increase energy efficiency should also be considered. Cheap energy sources do not encourage this outcome, but the time of cheap energy is already a thing of the past. This crisis has shown that the habits of energy consumers should change, especially the approach to managing energy consumption.
The situation in the global gas market also affects the Croatian gas market. The expected high cost of the energy transition means that price increases for gas, electricity and other sources of energy are not unexpected. So far, the Croatian Government has managed to absorb the consequences of rising energy prices, primarily for households, through its effective measures. However, the price hit has been so significant that protecting all consumer categories is impossible. Unfortunately, in the fertiliser factory Petrokemija d. d. (most important production plant for Croatian agriculture), the facilities have been suspended, and when operations will restart, given the huge cost of gas as an incoming raw material, remains uncertain.
Given that the Croatian Government is again preparing new measures (autumn package of measures), we are promoting the idea of considering the position of consumers of liquefied petroleum gas (LPG) held in small tanks and for whom the full price of gas has become a significant financial burden.
However, studious systematic measures are obviously needed, primarily those aimed at “containing the whims of the unpredictable energy market” that has generated the crisis. A distorted market should not be allowed to operate unhindered and not follow the logic of supply and demand (there is no evidence of a large shortage of gas in the global market) or a combination of geopolitical turmoil and speculative logic, achieving extra profit for powerful stakeholders in the market. Clearly, without the competent authorities of the EU and EU Member States being driven by the crisis to devise exceptional interventions to regulate and monitor the electricity and gas markets, exiting the vicious cycle of unabated rising energy (and commodity) prices will be difficult. Specifically, if the crisis and the existing unfavourable trends continue, the standard of living will be permanently distorted, and many economic and energy entities will collapse, which may lead to the demise of the economy.
At the session of the Croatian Government held on 18 August 2022, the Decision to Increase the Security of Gas Supply with the Construction of the Zlobin-Bosiljevo Gas Pipeline and to Increase the Capacity of the LNG Terminal to 6.1 billion Cubic Meters of Gas Per Year was adopted. We support the official Decision on the Public Investment Project of Interest to the Republic of Croatia, which demonstrates a commitment to ensuring investment funds for the project, which aims to better secure gas supplies for Croatia and the gravitating regions. Today, the importance of the LNG terminal on the island of Krk to provide the regular flow of gas supply in the Republic of Croatia is quite clear, and the recently implemented increase in annual capacities from 2.6 to 2.9 billion cubic meters of gas (corresponding to Croatia’s annual gas consumption) has critical importance for the security of the country’s gas supplies.
Unfortunately, in the crisis playing out in the energy markets, certain negative phenomena have not bypassed our country either. The recent affair related to transactions in gas trading has directed the public’s interest to a topic with which the Croatian gas industry, as a whole, has nothing to do with. A large number of employees in the Croatian gas sector diligently work and perform all the jobs for securing gas supplies, and this will certainly continue to be the case. Nevertheless, we condemn any behaviour directed toward personal gain rather than taking the broader social interest and interests of gas consumers at heart.