German nuclear closures could embed gas competition

Market: Electricity, Natural gas
13/04/23

The impending closure of Germany's remaining nuclear plants this weekend might raise the call on gas-fired generation to fill the gap as falling gas prices have pushed gas ahead of coal in the merit order, although a rise in renewable generation may counter the upside.

The three remaining nuclear power stations which were meant to go off line by the end of 2022 are on track to close on 15 April, while output from the plants has already been reduced gradually since the beginning of this year. Nuclear power generation made up roughly 4.5pc of the German generation mix so far this year at 2.68GW, down from 6.5pc at 3.74GW in 2022.

Day-ahead spark spreads for gas-fired units with 55pc efficiency have hovered just inside positive territory so far this month, having averaged minus €10.50/MWh in March, while they have remained well ahead of 38pc-efficient coal-fired units in the merit order (see graph). And forward prices suggest that gas will remain more profitable than coal to burn for power generation over the rest of the summer. This suggests that gas-fired stations could take a larger share of the power mix once the nuclear stations are shut down — although the extent of this depends on output from renewable energies.

The last nuclear stations that were closed, according to schedule at the end of 2021 — the Grohnde, Gundremmingen and Brokdorf units — left roughly 4GW of baseload capacity to be replaced. Fuel-switching levels were largely in favour of coal ahead of gas in January 2022, but most of the lost capacity was at the time replaced by a surge in wind generation.

Fuel-switching levels now paint a markedly different picture, as high gas stocks across Europe as well as brisk European LNG sendout may free up ample spare gas supply for the power sector. And a ramp-up in Germany's LNG sendout may further bolster supply — the country's regasification reached fresh highs in recent days.

In addition, forecasts point to slightly lower wind power generation on 16-17 April, which could add support to gas burn, while potentially prolonged curtailments to French nuclear generation as a result of strike action could also add upside.

German energy and water association BDEW managing director Kerstin Andreae this week highlighted that flexible gas-fired power plants were needed to "provide guaranteed output as a partner of the renewables" as nuclear energy has constituted a significant share of the mix so far this year.

"The strategy of the federal government to rely on hydrogen-capable gas-fired power plants and to increase gas imports to Germany" is the right one, according to Andreae.

The country's energy supply security will "remain guaranteed" despite the closure of the nuclear fleet, German economy and climate protection minister Robert Habeck said today.

By Florence Schmit

German day-ahead fossil fuel operarting margins €/MWh

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

25/04/25

Kurdish gas plans may boost Iraqi oil exports

Dubai, 25 April (Argus) — Plans for a significant increase in natural gas production in Iraq's semi-autonomous Kurdistan region over the next 18 months could not only help address the country's chronic power shortages but also enable Baghdad to boost its oil exports. The Pearl Petroleum consortium — which comprises Abu Dhabi-listed Dana Gas, Sharjah-based Crescent Petroleum, Austria's OMV, Hungary's Mol, and Germany's RWE — aims to increase gas production capacity in Kurdistan to 825mn ft³/d by the end of next year, representing a more than 50pc increase from current output. The plan involves expanding the capacity of the region's sole gas-producing field, Khor Mor, to 750mn ft³/d by the first quarter of 2026, and adding up to 75mn ft³/d from the Chemchemal field by the end of 2026. According to a source at Pearl, the development of Chemchemal is a key priority for the companies, as it is believed to have reservoirs comparable to those of Khor Mor. Under a 2019 agreement, the additional gas from the expansion project will be sold to the Kurdistan Regional Government (KRG) for a 20-year term, which should help eliminate the region's frequent power outages, particularly during peak summer months when demand for air conditioning is high. The Kurdistan region will also be well-positioned to supply any excess gas to the rest of Iraq. The federal government in Baghdad had previously approved a plan to import approximately 100mn ft³/d of gas from Khor Mor to power a 620MW plant in Kirkuk province, but no formal agreement has been signed to date. "The federal ministry of electricity and Crescent Petroleum have already met to finalise the agreement, which is ready for signature and awaiting implementation," the Pearl source said. "The infrastructure needed to support the sale of this quantity of gas is also in place." The plan has faced delays partly because of Iran's long-standing influence over Iraq and the potential impact such an agreement with the Kurdistan region could have on Baghdad's reliance on Iranian gas and power. However, the revival of US president Donald Trump's ‘maximum pressure' campaign against Tehran is forcing Baghdad to get serious about seeking alternative energy sources, with the Kurdistan region emerging as a viable option. Crude Export Boost Formalising the deal to import Kurdish gas would allow Baghdad to allocate more oil for export, as it would reduce the need to burn crude for power generation. Argus estimates that Iraq typically burns between 50,000 b/d and 100,000 b/d of crude in its power stations, depending on the season, and has recently increased imports of gasoil for power generation. By the time Iraqi Kurdistan has fully ramped up its additional gas capacity, Iraq's Opec+ crude output target will be 200,000 b/d higher than it is today, based on the group's latest production plans. By Bachar Halabi and Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Find out more

News

Investment funds slash net long position on Ice TTF

24/04/25

News

24/04/25

Investment funds slash net long position on Ice TTF

London, 24 April (Argus) — Investment funds have slashed their TTF net long positions on the Intercontinental Exchange (Ice) nearly in half so far in April, with commercial undertakings' net long position conversely rising. Investment funds' net long position on Ice dropped to 86TWh in the week ending 17 April, well below the 146TWh at the end of March, and was as low as 73TWh on 11 April ( see net positions graph ). The near-halving of their net position was driven entirely by the closing of longs, which dropped to 308TWh by 17 April from 383TWh on 28 March. In contrast, shorts dropped by only 16TWh in the same period, the exchange's most recent Commitments of Traders report shows. This left investment funds' total amount of open positions at 529TWh by 17 April, well down from 620TWh on 28 March. Global commodity market turmoil in recent weeks following the US' ‘liberation day' on which president Donald Trump announced tariffs on nearly every country may have prompted funds to reduce their exposure to gas market. The resulting fallout in global commodity, stock, bond and currency markets would have hit multi-strategy hedge funds in particular, which had exposure to many different assets, some of which are thought to be among the largest players in the overall investment fund category of participant. Wider macroeconomic factors rather than market fundamentals have driven the TTF this month, according to many traders, with daily TTF movements frequently having tracked wider moves across global macroeconomic indicators such as the S&P 500 index. In contrast with investment funds' sharply reduced net long position, commercial undertakings — the other largest category of market participant, mostly comprising firms with retail portfolios — more than doubled their net long position to 85TWh on 17 April from 33TWh on 28 March. This means commercial undertakings' and investment funds' net positions now have nearly exactly converged, with the difference between them having been as wide as nearly 350TWh as recently as early February. Commercial undertakings first flipped to a net long position in the week ending 28 February, and the net long has steadily increased every week since then. While investment funds significantly reduced their overall exposure to the TTF, commercial undertakings increased both their long and short positions in April. Total shorts rose by about 34TWh between 28 March and 17 April to 1.055PWh, while longs soared by 86TWh to 1.140PWh. This leaves their total open positions at about 2.195PWh, more than quadruple investment funds' 529TWh. The data could suggest that commercial undertakings took advantage of hedge funds unwinding their long positions, leading to a reallocation of about 90TWh of liquidity from speculative positions to risk reduction contracts. The large majority of commercial undertakings' overall open positions are risk reduction contracts, which total 1.457PWh out of aggregate open positions of 2.195PWh, or 66pc. In contrast, investment funds hold zero risk reduction contracts, making it likely that all of their interest is speculative. Commercial undertakings' risk reduction shorts increased only by about 7TWh between 28 March and 17 April to 747TWh, but longs soared by 92TWh over the same period to an all-time high of 710TWh. As recently as 28 February, risk reduction longs were as low as 550TWh, meaning an overall increase of nearly 200TWh in less than two months. The only other time in recent history when risk reduction longs increased at such a rapid pace was in 2018, when they jumped from 445TWh on 30 July to a peak of 644TWh on 15 October ( see risk reduction graph ). One explanation for such a distinct increase in risk reduction longs while shorts remained roughly even could simply be that utilities have purchased winter contracts instead of the more usual practice of hedging physical gas bought for summer injection by selling winter contracts. Typically, summer prices are below winter thanks to lower seasonal consumption, so a utility would buy the summer to inject the gas and sell the winter for when it will be withdrawn, locking in a profit margin. But because summer prices this year remained above winter, there was no commercial incentive to lock in a negative spread, meaning utilities may simply have opted to buy winter contracts to cover their expected demand. But since the turn of April, TTF summer-month prices have increased their discount to the front-winter, providing more of an incentive to inject gas. By Brendan A'Hearn Net positions on ICE TTF TWh Commercial undertakings' risk reduction positions TWh Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Eni cuts capex on macro headwinds, tariff uncertainty

24/04/25

News

24/04/25

Eni cuts capex on macro headwinds, tariff uncertainty

London, 24 April (Argus) — Italy's Eni has cut its spending plans for this year in response to macroeconomic headwinds, uncertainty around trade tariffs and a lower oil price outlook. The company is planning a series of "mitigation measures" worth over €2bn [$2.28bn], a key element of which is a reduction in 2025 capex to below €8.5bn from previous guidance of €9bn. Eni now expects net capex — which takes into account acquisitions and asset sales — to come in below €6bn this year, compared with its initial plan of €6.5bn-7bn. Other savings will come from "mitigating actions" around its portfolio, operating costs and "other cash initiatives", the firm said. Eni's plan reflects a tariff-driven deterioration in the outlook for the global economy and, in turn, global oil demand and oil prices. The company has revised its Brent crude price assumption for 2025 down to $65/bl from $75/bl previously. It has also lowered its refining margin indicator assumption for the year to $3.5/bl from $4.7/bl. The lower oil price assumption has not changed the company's upstream production forecast — it still expects 2025 output to average 1.7mn b/d of oil equivalent (boe/d). But Eni's production in the first quarter was only 1.65mn boe/d, 5pc lower than the same period last year. The firm's gas production took the biggest hit, falling by 9pc on the year to 4.5bn ft³/d (861,000 boe/d) as a result of divestments and natural decline at mature fields. Liquids output fell by 1pc year on year to 786,000 boe/d. Eni reported a profit of €1.17bn for January-March, 3pc lower than the same period last year. Underlying profit— which strips out inventory valuation effects and other one off-items — fell by 11pc on the year to €1.41bn. Eni said the fall in profits was mainly due to lower oil prices. The company also had to contend with weaker refining margins and throughputs, as well as a continuing downturn in the European chemicals sector. By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

US states including New York sue Trump over tariffs

23/04/25

News

23/04/25

US states including New York sue Trump over tariffs

New York, 23 April (Argus) — A coalition of 12 states including New York is suing the administration of President Donald Trump for imposing "illegal" tariffs that threaten to raise inflation and derail economic growth. The lawsuit, filed by attorneys general from the 12 states, argues that Congress has not granted the president the authority to impose the tariffs and the administration violated the law by imposing them through executive orders, social media posts, and agency orders. "President Trump's reckless tariffs have skyrocketed costs for consumers and unleashed economic chaos across the country," said New York governor Kathy Hochul (D). "New York is standing up to fight back against the largest federal tax hike in American history." The lawsuit alleges the tariffs will increase unemployment, threaten wages by slowing economic growth and push up the cost of key goods from electronics to building materials. The lawsuit, which was filed in the United States Court of International Trade, seeks a court order halting the tariffs. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Tariffs could cut FY profit $100mn-$200mn: Baker Hughes

23/04/25

News

23/04/25

Tariffs could cut FY profit $100mn-$200mn: Baker Hughes

New York, 23 April (Argus) — Oilfield services giant Baker Hughes expects a cut in its annual profit of as much as $200mn from tariffs, if current levels applied under President Donald Trump's 90-day pause stay in place for the rest of the year. That hit to profits does not include secondary effects, such as the impact of Trump's trade wars on slower global economic growth, as well as a renewed bout of weakness in oil prices. While the company is taking steps to mitigate tariff impacts, its "strong weighting" to international markets helps reduce its overall financial exposure, according to chief executive officer Lorenzo Simonelli. Increased oil price volatility due to tariffs , as well as the return of Opec+ barrels to the market, have resulted in a softening outlook for the market. As such, Baker Hughes now expects global upstream spending will be "down by high single digits" this year. The company forecasts a low-double digit decline in North America spending by its clients, and a mid-to-high single digit drop internationally. "A sustained move lower in oil prices or worsening tariffs would introduce further downside risk to this outlook," said Simonelli. "The prospects of an oversupplied oil market, rising tariffs, uncertainty in Mexico and activity weakness in Saudi Arabia are collectively constraining international upstream spending levels." The company has identified three areas of tariff exposure within its industrial and energy technology division, including volumes exported to China, critical equipment supplies from its facilities in Italy, and an expected modest impact from steel and aluminum tariffs as well as US-China trade activity. Mitigation efforts include exploring domestic procurement alternatives to reduce input costs and improving its global manufacturing footprint. In relation to its oilfield services and equipment segment, Baker Hughes has been working to boost domestic sourcing and is working with customers to recover some costs. Elsewhere, the repeal of an US LNG permitting moratorium under the Trump administration has resulted in higher orders. Baker Hughes has booked about $1.7bn in LNG orders in the US over the past two quarters, and several LNG customers in the Gulf Coast have signaled plans to expand capacity beyond 2030. Profit of $402mn in the first quarter was down from $455mn in the year-earlier period. Revenue held steady at about $6.4bn. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more