The International Energy Agency (IEA) forecasts a surge in global gas demand in the coming year, propelled by colder winter temperatures and declining prices. Emerging economies are expected to drive this increased consumption. However, the IEA’s Gas Market Report warns of potential renewed price volatility, citing geopolitical risks and supply-side concerns as key factors that could impact the stability of the gas market.
Global gas demand in 2023 experienced a modest 0.5% increase, fueled by growth in China, North America, Africa, and the Middle East.
China, with a 7% surge in natural gas demand, reclaimed its position as the leading LNG importer. However, Europe saw a 7% decline in natural gas consumption, reaching its lowest level since 1995, attributed to expanding renewables and increased nuclear power availability, influencing gas demand and lowering prices in mature Asian markets and Europe.
In 2024, global gas demand is anticipated to surge by 2.5%, equivalent to 100 billion cubic meters. The forecast attributes the growth to colder winter conditions compared to the unusually mild 2023, leading to increased demand for heating.
Natural gas prices, after sharply falling from 2022’s record highs, contribute to the demand recovery. Despite remaining above historical averages, the report predicts a return to growth in price-sensitive industrial sectors. In power generation, a marginal increase is expected, with higher gas use in Asia Pacific, North America, and the Middle East partly offset by reduced demand in Europe.
Supply-side challenges persist due to tight global LNG production and inadequate growth in Russian piped gas deliveries, while the US dominates as the largest LNG exporter, providing 80% of additional LNG supply in 2023.
Anticipated tight supply in 2024 is poised to limit global LNG output growth, restraining demand, especially in Europe and mature Asian markets. With a projected 3.5% increase in LNG supplies, below the 8% growth rate of 2016-20, challenges like delays in new liquefaction plants and feed gas availability issues may defer supply growth to 2025.
The gas market, emerging from a profound energy crisis, faces substantial demand amid manageable prices. However, meeting this demand swiftly is crucial due to tight supplies, and significant new LNG capacity is anticipated post-2024, influencing potential price fluctuations throughout the year, according to Keisuke Sadamori, Director of Energy Markets & Security at the IEA.
Global gas markets face significant geopolitical uncertainties in 2024, posing the greatest risk, according to the report. Events like Russia’s invasion of Ukraine heightened Middle East tensions, and concerns about intentional disruptions to critical infrastructure, such as pipelines, could lead to increased volatility.
In 2023, key import markets responded with policy measures and regulations emphasizing affordability and supply security.
The Joint Gas Purchasing mechanism was implemented by the European Union, Japan launched the Strategic Buffer LNG, and China developed its Natural Gas Utilization Policy. These initiatives establish guiding principles for the systematic expansion of natural gas demand in the years ahead.
The IEA’s Gas Market Report emphasises energy security and assesses greenhouse gas emissions in gas supply chains. Part of the Low-emissions Gases Programme, it highlights increasing political support for low-emission gases like hydrogen and biomethane to aid countries in meeting energy and climate targets.