Global gas supply to remain tight in 2023 amid lower Russian pipeline deliveries to Europe
The global gas demand is expected to remain flat in 2023, with a higher demand in Asia Pacific and the Middle East offsetting the expected declines in Europe and North America.
Global gas supply is set to remain tight in 2023 and the global balance is subject to a wide range of uncertainties. Risks such as weather factors, such as a dry summer or a cold Q4, lower availability of LNG and the possibility of a further decline in Russian pipeline gas deliveries to the European Union have set grounds for cautious optimism, according to the Gas Market Report Q2-2023 released by the International Energy Agency (IEA).
IEA -a Paris-based agency gathering of the 31 mostly industrialised countries and much of the EU, revealed in its report that the global gas demand is expected to remain flat in 2023, with a higher demand in Asia Pacific and the Middle East offsetting the expected declines in Europe and North America.
In Asia, gas demand is projected to increase by close to 3 per cent, with China and India as the main drivers. In China, the demand is projected to increase by over 6 per cent in 2023, supported by a recovery in economic activity and potentially higher gas use in industry.
In the Middle East, gas demand is forecast to increase by 2 per cent, driven by Iran and Saudi Arabia. The demand in advanced economies in Europe is projected to decline by 5 per cent as rapidly expanding renewables weigh on gas-fired generation. After strong growth in 2022, gas demand in North America is expected to decline by 2 per cent as a result of lower gas use for space heating, power generation and industry.
LNG supply not enough to offset Russia's low deliveries
The European and global gas markets suffered a major supply shock in 2022 when Russia sharply reduced its pipeline gas deliveries to the European Union – by 80 per cent over the course of the year – and triggered a global energy crisis.
The level of Russian pipeline gas supplies is a major uncertainty for the remainder of 2023. If flows to the European Union continue at the levels seen in the first quarter, Russian piped gas deliveries to advanced economies in Europe would drop by 45 per cent in 2023 compared with 2022, according to the IEA.
Following a 90 bcm drop in Russian gas production in 2022, lower exports and muted domestic demand are expected to further reduce Russia’s output by over 50 bcm in 2023, adding to the challenges facing the Russian gas industry.
Additionally, the global LNG supply is forecast to increase by a mere 4 per cent (or over 20 bcm) in 2023, which would not be sufficient to offset the expected reduction in Russia’s piped gas supplies to Europe.
LNG became a new baseload supply for Europe, accounting for two third of the region’s imports and meeting around one-third of its gas demand through the 2022/23 winter season.
After strong growth in Q1 2023, OECD Europe’s LNG imports are expected to decline for the remainder of the year amidst lower injection needs and a continued decline in European gas consumption.
Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
- Top Gainers
- Top Losers
- 52 Week High