By Rhod Mackenzie
A recovery in gas demand in the Asia-Pacific region (APR), led by China, could once again force the EU into price competition for liquefied natural gas ( LNG ) supplies, even though gas demand in Europe is falling.
This follows from the data presented at the Gas Exporting Countries Forum ( GECF ) June 2023 report.
Key data for June 2023
Gas consumption. In June 2023, the EU saw a significant decrease in gas consumption - by 12% year-on-year, to 18 bcm . On the contrary, China's gas consumption increased by 5% year-on-year from January to May 2023, reaching 162 bcm . The United States maintained a steady course, while gas consumption remained at the same level as in June 2022, reaching 64 bcm .
Gas production. In May 2023, gas production in Europe decreased by 16% compared to the same period in 2022, reaching 13.7 bcm . This decrease was caused by the decrease in production volumes of the leading gas producing countries in the region, in particular Norway, the UK and the Netherlands. Shale gas production in the United States in June 2023 increased by 5% compared to the same period in 2022, amounting to a total of 82.6 bcm .
Gas trade.
Imports of pipeline gas to the EU in June 2023 continued to decline, decreasing by 8% compared to June 2022 and reaching 11.6 bcm . However, the growth rate of global LNG imports accelerated to 6.8% compared to the same period in 2022, reaching 32.8 million tons. This growth was driven by a strong recovery in the Asia-Pacific region, led by China. China's LNG imports reached their highest level since January 2022, and the region's LNG imports recovered to the same level in 2021. In fact, China's gas import levels, including both LNG and pipeline gas, continued to rise year on year , reaching a record high for the month of June.
Gas storage. The season for net gas injection into underground storage facilities ( UGS ) continues both in Europe and North America. In the EU, the average volume of gas in UGS facilities in June 2023 increased to 76.6 bcm , which is 74% of the region's storage capacity. This high level of gas in storage has slowed down the pace of gas injection, contributing to the stability of gas and LNG spot prices. In the USA, the volume of underground gas storage facilities has grown to 77.0 bcm , which is equivalent to 57% of its capacity. The estimated total LNG storage capacity in Japan and South Korea is 11.2 bcm .
The situation in Europe
Gas consumption by the EU countries in the 1st half of 2023 decreased by 10% year-on-year, to 178 bcm .
In June 2023, gas consumption in the EU decreased by 12% to 18 bcm , as a result of growing energy generation from wind and solar and, accordingly, a decrease in dependence on gas for electricity generation.
Also, the demand for gas in the EU was affected by the ongoing implementation of the EU regulation, which provides for a voluntary reduction in gas demand by 15% from April 1, 2023 to March 31, 2024. In the industrial segment, gas demand was not able to fully
recover, despite the fall in prices for gas in Europe within a month.
Dynamics of gas demand in Europe in H1 2023 :
in Germany, a decrease of 8.3% was recorded, to 41 billion m 3 ,
in Italy - by 15%, up to 33 billion m 3 ,
in France - by 10%, up to 19 billion m 3 ,
in Spain - by 14%, up to 15 billion m 3 ,
in Great Britain - by 11%, up to 31.5 billion m 3 .
Pipeline gas imports to the EU in June amounted to 11.6 bcm , which is 8% lower than in May and 29% lower than in June 2022.
In general, for the 1st half of 2023, pipeline supplies to the EU decreased by 34% to 76.7 bcm .
Sources of pipeline gas supplies:
Norway - 43.4 billion m 3 (decrease in supplies by 9%),
Algeria - 15 billion m 3 (b / s),
Russia - 11.7 bcm ( down 75%),
the remaining volumes - from Azerbaijan and Libya.
The share of Norwegian gas in the total volume of pipeline supplies in 2023 is 57%, Russian - 15%.
LNG supplies to Europe in June 2023 increased by 4.1% to 9.29 mmt demand for LNG in the Asia-Pacific region, this could once again increase competition for gas supplies and exacerbate the situation on the spot market.
For comparison: in June 2023, the Asia-Pacific countries increased LNG imports by 8.6%, to 20.93 million tons, and in the first half of 2023 - by 2.3%, to 129.38 million tons.
In general global LNG exports in June 2023 increased by 0.4%, to 32.18 million tons, in the first half of the year - by 4.1%, to 205.45 million tons.