Global Natural Gas Market Will Remain Tight In 2023 Due to High Prices and Energy Saving Measures in Europe
According to the prediction by International Energy Agency (IEA), the worldwide gas markets will continue to remain tight in the approaching year due to the declining piped gas supplies from Russia even as gas demand falls in Europe as a result of high prices along with energy saving measures.
As per IEA, since 2021, the natural gas markets worldwide have been tightening despite the declining consumption of 0.8 percent in the current year caused by a record 10 percent contraction in Europe and low demand from the Asia Pacific region. Despite this, gas consumption will likely follow an upward trajectory by 0.4 percent the following year.
Europe's gas consumption witnessed the sharpest decline of 10 percent in the starting eight months of the present year, lower by 15 percent in the industrial sector as businesses constrained their productions as a result of high prices. Simultaneously, piped gas supply from Russia to Europe has diminished following the Nord Stream 1 pipeline shutdown from Russia to Germany earlier this September.
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Suppose the condition arises where Moscow threatens to cut the Ukrainian energy firm Naftogaz's gas supply routes to Europe. In that case, it will worsen the already existing energy crisis just in time for winter when the heating season begins.
The gas supply requirements in Europe are being met by the increasing liquefied natural gas (LNG) imports. According to the forecasts by the IEA, Europe's LNG imports will rise by more than 60 billion cubic meters (bcm) in the current year, twice the amount for the remaining globe.
At the same time, LNG imports in Asia are predicted to remain at a lower level compared to the year before for the remainder of 2022, primarily due to Europe's high gas prices supporting the incoming cargoes in the continent. Contrastingly, the Chinese LNG imports are likely to increase during 2023 as per an array of new contracts finalised in 2021 starting and also as an above-average winter will add to the demand from northeast Asia.
It was forecasted by the IEA that the EU gas storage would be lower than 20 percent full during February in case the LNG supply stays bullish if the supply from Russia to Europe is wholly cut off starting November 1st. Still, it could hit lower to 5 percent full until February if the LNG supply lowers.
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During this time, the Natural gas demand in Japan and China remained unhinged, but it narrowed in Korea and India. The demand for gas in China is expected to rise by less than 2 percent during the present year, the lowest yearly growth rate compared to the early 1990s. On the other hand, the price of natural gas in the United States soared to its highest levels in summer since 2008; however, North America was among the few parts of the world where there was an increase in demand due to demand from power generation.
As per Procurement Resource, the global gas markets is witnessing tight supplies due to Russia cutting supplies to Europe. Also, in the face of the decreasing consumption of 0.8 percent in the present year resulted by a record 10 percent contraction in Europe and lesser demand from the Asia Pacific region.