1, the relationship between supply and demand is dominant
Demand side: Since the emergence of natural gas, the proportion of replacing other energy sources represented by oil has increased year by year. With the continuous improvement and acceleration of economic development level, population and urbanization process, as well as the continuous improvement and improvement of energy structure, the demand for natural gas is increasing.
Supply side: With the progress of international energy exploration technology, new gas fields are continuously discovered, and the improvement of natural gas storage technology and transportation technology improves the supply efficiency, thus promoting the change of natural gas price.
2. Price fluctuation of substitutes
Because natural gas, a potential fuel, has similar use characteristics to natural gas, the prices of some alternative fuels related to natural gas also affect the pricing of natural gas products to some extent. In long-term natural gas contracts, some countries in Europe and Asia set prices with reference to oil prices. For example, in the natural gas purchase contract signed by Gazprom in Russia and GDF in France, the price formula is based on the average oil price for three months. Even in the United States, where natural gas is highly marketized, there is a certain correlation between its gas price and oil price.
3. Cost factor
The cost of natural gas exploitation is one of the important factors affecting the price and output of natural gas, and it is also the bottom line of natural gas pricing. The drilling cost of natural gas wells in the United States began to rise from 1949, and the average drilling cost in 2006 was1930,000 USD per well. The rising cost of natural gas exploitation is one of the important factors that push up the price of natural gas.
Due to the overproduction of natural gas in the United States, part of it will be transported to Europe, forcing Russian oil and gas supplier Gazprom to reduce gas prices and accelerating the process of replacing coal-fired power generation with gas-fired power generation.
A spokesman for BP said: "The price of Russian natural gas in Europe fell sharply last year, probably not just because of the drop in oil prices." . "Russia and the United States are actually competing on price." Because the LNG transported by the United States is expected to continue to rise in the next five years, the price will remain at $4 /mmBtu in hell, and Russia must reduce the price to maintain its market share.
BP also found that Russia is increasing the number of pipelines that directly transport liquefied natural gas to Germany, not just increasing the traffic volume. Although there is a lot of cooperation in this NordStream2 project, it is also opposed in Belgium because of Russia's too tough diplomatic means.
The greater impact of liquefied gas in the United States on Europe may be to promote gas-fired power generation, which directly led to a sharp drop in coal consumption last year 1.8%.