Due to the war in Ukraine and sanctions against Russia, the European energy market is in a very volatile state and we are currently experiencing unexpected and unprecedented cost levels for electricity. This means that costs are sharply increased in producing industrial and medical gases. To maintain a sound and sustainable production and delivery of gases, we are forced to continue adding a temporary surcharge for liquefied gas products, this in addition to agreed prices.
The cost of electricity accounts for about 50% of our production cost. To smoothen price fluctuations in the electricity market and thus obtain a more stable and transparent electricity cost, we secure the price of our electricity portfolio (currently 90%) through the purchase of so-called futures on Nasdaq commodities. This means that 10% of our electricity needs are purchased on the open SPOT market NordPool. From January 1, 2023, the calculation basis will be the reference price that Svenska Kraftnät published during the autumn of 2022, i.e., SEK 0.75 per kWh.
If the average of SPOT prices over a period from the 16th to 15th in the previous months exceeds the reference price, a temporary price surcharge will be charge as shown below.
- SEK 0.10 per kg oxygen, nitrogen and carbon dioxide for every SEK the SPOT-average price per kWh exceeds the reference price
- SEK 0.42 per kg argon for every SEK the SPOT-average price per kWh exceeds the reference price
The average SPOT-price for each period is compared to the reference price and sets the surcharge rate for the same period the coming month. For example, Jan 16 to Feb 15 sets the rate for March, Feb 16 to March 15 sets the rate for April, and so on.
Electricity cost surcharges are temporarily charged for liquefied gases on May 1, 2023- 0.00 SEK per kg oxygen, nitrogen and carbon dioxide (0.01 SEK per kg from April 1 to 30)
- 0.00 SEK per kg of argon (0.05 SEK per kg from April 1 to 30)
Questions and answers
How is Linde Sweden affected by the situation in Ukraine?
Linde Sweden's delivery capacity is not affected by the situation in Ukraine. We have the absolute majority of our production in Sweden. However, due to the extreme price on natural gas, several producers of ammonia and fertilizers have now reduced or stopped the production. As carbon dioxide is residual product from this production, there is now a huge CO2 deficit across Europe. This has made it more difficult and expensive for us to maintain our delivery capability for liquefied carbon dioxide and dry ice, which have been communicated directly to affected customers.
Do you see any bottlenecks in distribution and production?
No. Production and distribution are not dependent on either Russia or Ukraine.
How is Linde Sweden affected by factors outside Sweden?
Linde Sweden is affected by factors outside Sweden, such as costs for electricity, transport and an increased overall inflation. We comply to 100% with all relevant international sanction/embargo lists.
Where does production take place?
We have most of our production on Swedish soil. Production is conducted at a number of facilities.
In which countries outside Sweden are gases produced for customers in Sweden?
Germany, England and the United States.
Does Linde Sweden sell products / parts / services / raw materials or anything else that directly originates in its entirety or in parts from Russia or Belarus?
No
If you have any questions, please contact our European Ukraine Crisis Team at: euct.se@linde.com.