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Market and economy of the gas industry

Medium term horizon

In the medium term up to the year 2030, we expect a slight increase in the prices for gas supply to the Czech Republic as a result of similar development at the global level. Between 2020 and 2023, the previously expected global imbalance of gas supply and demand, which was connected with a sharp increase in the capacity of global export LNG terminals, is unlikely to occur. There is sufficient response to their growth by the global demand for gas which is guided by a sharp increase especially in China, but also in other developing Asian countries. Moreover, there are currently no projects which would keep increasing the LNG supply in the market after 2023 that have reached the final investment decision.

The Czech market will remain to be dominated by gas importers connected to the company Gazprom Export which supplies gas to Czech customers based on a long-term contract (until 2035). The market element accounts for the price for this gas only partially; the dominant factor is indexation to oil and oil derivatives, and is thus less prone to seasonal fluctuations.

Long term horizon

Gas prices in European markets, including the Czech one, will be largely based on the market principle and therefore we expect that the price will follow the growth trend also in the long term. Nonetheless, price arbitrage between the temporarily cheap and available LNG and mainly Russian gas may make itself felt by a short-term decrease in gas prices in the European market area. Trading with gas in regional trading points with gradual balancing of OTC shares and stock market transactions will be on the rise here as well.

The range of total investments for the renewal and development of the gas industry between 2019 and 2050 will depend on individual case study; it reaches amounts between 450 and 550 billion CZK2016. The biggest differences between the case studies will occur at the end of the period, namely in 2050, when the expected real annual investments will be between 180 and 260% (18-26 billion CZK2016) in comparison to 2017. Estimated annual investment in the gas industry in 2050 is shown in the following figure.

Estimated annual investment in the gas industry in 2050

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