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Global gas markets to remain tight well into 2023: IEA

The outlook for gas markets remains clouded, not least because of Russia’s reckless and unpredictable conduct, which has shattered its reputation as a reliable supplier. (Photo: Bloomberg)Premium
The outlook for gas markets remains clouded, not least because of Russia’s reckless and unpredictable conduct, which has shattered its reputation as a reliable supplier. (Photo: Bloomberg)

Natural gas markets worldwide have been tightening since 2021 and global gas consumption is expected to decline 0.8% this year as result of a record 10% contraction in Europe and flat demand in the Asia Pacific region

NEW DELHI: Global gas markets are expected to remain tight well into 2023, as Russian pipeline supplies dwindle and demand falls in Europe in response to energy saving measures amid high prices, the International Energy Agency (IEA) said on Monday.

Natural gas markets worldwide have been tightening since 2021 and global gas consumption is expected to decline 0.8% this year as result of a record 10% contraction in Europe and flat demand in the Asia Pacific region, the IEA said in its quarterly gas market report.

Meanwhile, global gas consumption is forecast to grow by only 0.4% next year, but the outlook is subject to a high level of uncertainty, particularly in terms of Russia’s future actions and the economic impacts of sustained high energy prices, the IEA said.

“Russia’s invasion of Ukraine and sharp reductions in natural gas supplies to Europe are causing significant harm to consumers, businesses and entire economies – not just in Europe but also in emerging and developing economies," Keisuke Sadamori, the IEA’s director of energy markets and security, said in the report.

“The outlook for gas markets remains clouded, not least because of Russia’s reckless and unpredictable conduct, which has shattered its reputation as a reliable supplier. But all the signs point to markets remaining very tight well into 2023."

In some emerging and developing economies, the price spikes triggered shortages and power cuts. Europe’s gas consumption declined by more than 10% year-on-year in the first eight months of 2022, driven by a 15% drop in the industrial sector as factories curtailed production, the IEA said.

The IEA forecasts that Europe’s LNG imports will increase by over 60 billion cubic metres (bcm) this year, or more than double the amount of global LNG export capacity additions, keeping international LNG trade under strong pressure for the short- to medium-term.

This implies that Asia’s LNG imports will remain lower than last year for the rest of 2022.

However, China’s LNG imports could rise next year under a series of new contracts concluded since the beginning of 2021, while a colder-than-average winter would also result in additional demand from northeast Asia, further adding to market tightness.

The analysis shows that without demand reductions in place and if Russian pipeline supply is completely cut, EU gas storage would be less than 20% full in February, assuming a high level of LNG supply – and close to 5% full, assuming low LNG supply, the Paris-based intergovernmental organisation said.

Currently, EU storage facilities were close to 90% full as of end of September, though the absence of Russian supply presents challenges for refilling them next year.

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