Czech ČEZ: No LNG shortage, but prices may rise in a prolonged conflict

There is no risk of a shortage of liquefied natural gas (LNG) due to the conflict in the Middle East, with deliveries to terminals continuing as planned. ČEZ deputy chairman of the board Pavel Cyrani told journalists today. According to him, the current situation will therefore not yet affect prices for customers. However, he acknowledged that a prolonged conflict could lead to higher gas prices.

"We have contracted LNG slots. Deliveries are arriving as normal," Cyrani said.

He recalled that Czechia is currently not dependent on gas from the Middle East, with most LNG for Czechia coming from the United States. According to Cyrani, this means that the situation from four years ago will not be repeated, when, following the start of Russia's aggression against Ukraine, there was a threat of disruptions to gas supplies from Russia, on which the Czech Republic was dependent at the time.

However, the conflict may affect gas prices. According to Cyrani, it has so far been reflected in short-term markets, particularly in April contracts. Over a longer time horizon, the conflict's impact on market prices remains minimal, he said. However, this could change if the current situation in the Middle East were to continue for several months.

The conflict will not yet be reflected in prices for customers. "We have already fully purchased supplies for this year, and we bought gas stocks in advance for next year, so we can now afford to slow down further purchases or halt them for several weeks," Cyrani said. However, in the event of longer-lasting problems over a period of several months, the situation would also need to be addressed in customer offers, he said.

LNG supplies from the United States are one of the items on the agenda of Industry Minister Karel Havlíček's (ANO) current visit to the US. According to the minister, the aim is to lease capacity directly on the US side, which ČEZ would subsequently import into its leased capacity in Europe.

ČEZ currently has leased LNG capacity at the terminal in Eemshaven, the Netherlands. The existing agreement secures up to one-third of Czechia's annual gas consumption. The contract expires in September next year. The company recently entered a tender to extend the capacity. In addition, ČEZ is expected to have capacity secured from next year at a terminal under construction in Germany, although its construction is being delayed, according to the government.