Gas demand in Europe fell sharply in the first half of 2023 and this trend seems to continue until the end of the year, estimates the Gas Exporters Forum (GECF) in a monthly report learned by AFP on Thursday.
Under watch since the start of the war in Ukraine, which has made it difficult for the EU to get gas supplies from Russian pipelines, consumption fell 10.6% in the first half of 2023, or 21 billion cubic metres, according to the report.
This decline is explained “first of all by the exceptionally warm winter that engulfed the EU in the first quarter of 2023,” which caused a drop in demand for heating in homes, according to the report. He also cites the voluntary policy of Brussels, which has set a consumption reduction target of 15% for its 27 Member States.
Mild weather
In the second half of 2023, “the probability of observing similar trends in natural gas consumption in Europe remains particularly high,” estimates the GECF, which brings together a dozen gas-exporting countries, excluding the United States. It is based in particular on the most recent weather forecasts “which suggest that the fourth quarter of 2023 will be characterized by relatively warmer conditions.”
Beyond this element, which remains the object of caution, the report stresses the continuation of the voluntarist policy of sobriety in Europe. The report mentions the drop in demand from the industrial sector, “it is unlikely to experience a substantial recovery in the next six months.”
The GECF points to the first half of 2023 as proof of this, during which, despite falling gas prices in Europe, industrial demand did not return to pre-slump levels. “For the year 2023, we expect a drop of around 8 to 10% compared to 2022,” indicates the Forum.
LNG as reinforcement
This does not prevent European countries from filling their storage units before winter. According to aggregate data from “Gas Infrastructure Europe” (GIE), an association that brings together European gas infrastructure operators, European storage facilities were on average almost 90% full on Thursday.
But they will only cover a part of the consumption. France, for example, has an underground natural gas storage capacity of 130 TWh, that is, less than a third of its annual gas consumption, which is around 450 TWh, according to the Energy Regulation Commission.
Therefore, like all of Europe, it will have to depend on imports by gas pipeline or methane tankers (liquefied natural gas), in an environment of uncertainty in terms of prices.
Because not all regions of the world should follow the same trend as Europe. Thus, China experienced a 6% increase in its gas consumption in the first half compared to the same period last year, according to the GECF, which expects the same dynamics in the second half, given industrial demand.
If global market fundamentals “remain relatively weak,” particularly due to weak European demand, the GECF estimates that growing LNG demand in South and Southeast Asia “will support prices in the coming months.”
Source: BFM TV
