Paris, 28 Feb. The International Energy Agency (IEA) admits great uncertainty about what China’s demand for liquefied natural gas (LNG) will be this year and that this will be the driving factor for supply problems in Europe, even more so than the total closure of gas pipelines from Russia.
In its quarterly report on the gas market, published on Tuesday, the IEA establishes as a reference scenario an increase in Chinese demand for LNG of 10% in 2023, after the historic drop of 21% in 2022, which was the one of the factors explaining why there was no gas shortage in Europe last year.
But its experts are also considering two other scenarios, one with a further decrease of 10% of this LNG which arrives by ship to the Asian giant on the basis of an increase in demand for Chinese gas of only 3.2%, which would be covered by more own production and with an increase in imports by gas pipeline, in particular from Russia.
The most worrying scenario for Europe would be that of a China which would absorb 35% more LNG than in 2022 due to a 9.4% increase in gas consumption which would not be its own deposits nor the inflows from the gas pipeline, which would remain stagnant.
The agency warns that this would generate “fierce competition in international markets and could send prices back to the unsustainable levels of last summer”.
Esa escalada de precios del gas en Europa, que tuvo también su corolario en las tariffas de la electricity, leading to a drastic reduction in consumption, con medidas de ahorro, pero también de reduction de la actividad sobre todo en ciertas industrias de use intensive de Energy.
In total, gas consumption in Europe fell by 13% in 2022 and the fall was particularly intense in the third quarter (the drop in volumes traded was 20%), coinciding with the peak in prices.
Europe replaced some of the gas no longer reaching it by pipeline from Russia with LNG delivered by ship, which jumped 63%, mainly from the United States, which accounted for about two-thirds of this increase ( 43,000 million cubic meters).
Even so, global LNG production grew by a relatively modest 5.5%, although in value it doubled to a record high of $450,000 million.
Behind this apparent paradox are prices, especially in Europe. The reference price on the Old Continent has been multiplied by almost eight, if we compare it to the average for the period 2016-2020.
Although it did not reach the heights of Europe, in the rest of the world the shortage of LNG has also had consequences. In Asia, demand was reduced by 2%, which was also influenced by covid restrictions in China and a relatively mild period in the northeast of this continent.
The Chinese LNG demand forecast range that the IEA is working on is equivalent to 40,000 million cubic meters, from 75,000 in the low scenario to 115,000 in the high scenario.
This is more than the approximately 28 billion cubic meters that could arrive from Russia if Moscow maintained throughout this year an average flow equivalent to that since the interruption of supply at the end of August by the Nord Stream 1 gas pipeline. EFE
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