Rising demand for natural gas in Asia and the Middle East is set to offset a decline in other regions this year, helping to keep the global market tight, according to the International Energy Agency.
(Bloomberg) — Rising demand for natural gas in Asia and the Middle East is set to offset a decline in other regions this year, helping to keep the global market tight, according to the International Energy Agency.
China’s consumption is forecast to jump by more than 6%, underpinning an increase of almost 3% in Asia on the whole, the agency said in its quarterly Gas Market Report. Demand in Europe’s advanced economies is poised to drop 5% as renewable energy takes up a larger share of power generation.
Gas markets were upended last year as Russia cut most pipeline flows to Europe amid its war in Ukraine. The continent was spared a harsh winter as it cut demand and relied on liquefied natural gas to help fill the gap. However, supply risks still lurk, including competition with Asia, the possibility of lower flows from Russia, and a potentially hot summer or cold winter.
“Global gas supply is set to remain tight in 2023, and the global balance is subject to an unusually wide range of uncertainties,” said the IEA, which advises major economies.
Asia’s consumption — and China’s recovery from the Covid era, led by its the industrial sector — will be key for the market. The IEA expects the country’s imports of LNG to jump by as much as 15% this year, while still remaining below 2021 levels. India’s gas demand is projected to increase by 4%, following a drop amid soaring prices in 2022.
Elsewhere, consumption of gas in the Middle East is expected to rise by 2%, in large part due to Iran and Saudi Arabia. In North America, it’s set to drop by 2%, as less of the fuel is used in heating and power generation. Global demand is forecast to remain flat.
No Guarantees
“The improved outlook for gas markets in 2023 is no guarantee against future volatility and should not be a distraction from measures to mitigate potential risks,” the IEA said.
While the US is set to become the world’s main LNG exporter this year, global supply of the fuel is expected to increase by just 4%. That’s not enough to offset the forecast drop in Russian pipeline deliveries, according to the agency.
LNG imports in Europe’s advanced economies are forecast to decline for the remainder of the year, after posting strong growth in the first quarter. The change is due to lower needs for storage and reduced gas demand.
European gas consumption dropped 16% for the 2022 winter heating period and marked the steepest drop in absolute terms for any winter in the IEA’s records. Still, weather-related factors accounted for just 40% of the region’s decline in demand. Other factors included gas-saving policies, fuel-switching and rising energy prices.
–With assistance from Elena Mazneva.
(Updates with chart.)
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