The global natural gas market will be rebalanced but will remain tight in 2023

The China National Petroleum News Center

Published Date: 2023-05-09 12:43

While the global gas market is gradually rebalancing, supplies are expected to remain tight in 2023 due to less pipeline gas delivery to Europe, the International Energy Agency (IEA) said.

In 2022, pipeline gas deliveries to the EU fell by 80 percent, triggering a global energy crisis and causing a major supply impact on the European and global gas markets.

Moderate weather, increased LNG exports and a strong drop in gas demand have helped ease the impact, bringing Europe's gas storage to 60%.

In its quarterly natural gas market report, the IEA said reduced market strain and relatively ample inventories before the summer justify cautious optimism about security of supply.

The report says the improved outlook for the gas market in 2023 does not guarantee future volatility.... Global gas supply will remain tight in 2023 and the global balance faces unusually broad uncertainty.

These risks include adverse weather, such as dry summers, reduced supply of LNG, and a possible further decline in natural gas deliveries to Europe, which could increase market tensions and price fluctuations.

In Europe, natural gas consumption fell by a record 16% for the 2022 / 2023 heating season, or 55 billion cubic meters.

The report says the EU needs only half the storage injection level in summer 2022 to reach its 90% storage target at the start of the 2023 / 2024 heating season.

LNG currently accounts for two-thirds of Europe's natural gas imports, meeting about one-third of the natural gas demand for the 2022 / 2023 heating season. During the heating season, European LNG imports rose by 25 percent, or 20 billion cubic meters, with America supplying more than 45 percent of the increase.

But global LNG supply is expected to grow by only 4% (or more than 20 billion cubic meters) in 2023, which is not enough to offset the expected decline in pipeline gas supply in Europe.