Global gas consumption declined by 1.6% last year and will remain at approximately the same level in 2023, but “blue fuel” prices may still resume their growth amid lifting of COVID-19 restrictions in China, the International Energy Agency (IEA) said on Tuesday.
“Natural gas markets worldwide continued to tighten last year despite global consumption declining by an estimated 1.6% in 2022. Demand is forecast to remain flat in 2023, but the outlook is subject to a high level of uncertainty, particularly in terms of Russia’s future actions and the economic impacts of fluctuating energy prices,” the IEA said in a statement accompanying the publication of the Gas Market 2023 report.
The unprecedented rise in gas price has resulted in Europe reducing its demand for “blue fuel” by 13% through government emergency policies and scaled-back production, the energy agency added. Meanwhile, Asia witnessed a 2% drop in gas demand due to high prices for liquefied natural gas (LNG), COVID-19 restrictions in China and mild weather in the northeastern part of the Asia-Pacific region.
“Natural gas prices, although still high by historical standards, have fallen in recent months. However, that could change in 2023 as demand for LNG picks up in Asia, particularly in China. As the world’s largest importer of natural gas, the country recently lifted its Covid restrictions, which stifled domestic demand throughout last year,” the agency’s statement read.
IEA experts have estimated that China’s LNG demand could increase by 10% in 2023 or even by 35% under an optimistic scenario, if prices continue to fall and general economic activity recovers quickly.
“This would spark fierce competition in international markets and could see prices return to the unsustainable levels seen last summer, representing a concern for European buyers in particular,” the IEA said.
Many countries in the world have been facing a massive energy crisis and surging inflation as part of the post-pandemic global economic recession. The situation has further exacerbated against the backdrop of the Ukraine crisis, as the hostilities and Western sanctions against Russia have led to disruptions of supply chains and resulted in a spike in energy prices worldwide.