The outlook for global gas supplies this year remains shrouded in uncertainty as the threat of further cuts from Russia hangs over the market, the International Energy Agency (IEA) warned today.
“The profile of Russian piped gas supplies remains a major uncertainty” for Europe, the Paris-based climate agency said in its latest quarterly gas report, adding that importing markets remain exposed to a tight supply environment.
“Assuming that flows to the European Union continue at their current level, Russian piped gas deliveries to OECD Europe would drop by almost 40 per cent in 2023 compared with 2022,” the group said.
It said there was a risk that Russian piped gas supplies to the the bloc “could cease completely”, heaping further pressure on markets.
While LNG imports could help plug the shortfall, the bloc’s potential LNG supplies would be constrained by competing demand from China.
The global natural gas market suffered a major shock last year when Russia slashed pipeline deliveries to Europe placing unprecedented pressure on supply and triggered a global energy crisis.
The IEA revealed that last year’s unprecedented price rise in gas prices led to a 13 per cent reduction in Europe’s gas demand as governments rolled out emergency policies, with industry scaling back production and households reducing consumption levels.
The report also revealed demand dropped in Asia – but only by two per cent.
This was a consequence of elevated LNG prices, Covid-related disruptions in China, and consistently mild weather in Northeast Asia.
Natural gas prices have dropped this year, as mild winter weather in the northern hemisphere, combined with sustained LNG inflows and adequate gas storage inventories, put downward pressure on European and Asian spot prices.
However, prices remain high by historical standards and could rebound as demand for LNG picks up in Asia and China in particular.