International Gas Union says market is in state of ‘fragile and unstable equilibrium’ as shortages still there
Liquefied natural gas has been crucial in navigating through the gas market crisis, playing a key role in offsetting the shortages in Europe, with global LNG exports showing a first-half 2023 year-over-year increase of more than 4 percent despite volatilities due to facility maintenance and outages in the Northern Hemisphere summer months.
The market report and outlook comes from the 90-page Global Gas Report 2023 just issued by the International Gas Union, the global voice of the gas industry with more than 150 corporate members in over 80 countries, representing 90 percent of the global gas market and whose President is Li Yalan of China.
“In the context of the globally tight LNG supply, while it was instrumental in keeping the lights on in Europe, the unaffordable prices left some countries in Asia in the dark,” the IGU stated.
“Europe’s natural gas imports shifted from Russian pipelines towards LNG leading to a 69 percent increase in its LNG imports, reaching 124 million tonnes (169 billion cubic metres) and making Europe the biggest importing market, absorbing a significant share of the global LNG volume by outbidding other customers,” the IGU added.
The IGU noted that roughly two thirds of the additional volumes, or 30MT of LNG,came from the United States and in Asia, China reduced LNG imports from Australia and the US by a total of 21MT, while it increased imports from Qatar by around 7.4MT.
Supply shortage
The IGU also stated natural gas prices had cooled in 2023, largely due to demand-side adjustments in Europe and Asia, yet they remain above pre-Covid and pre-energy crisis levels.
“The shortage of global supply, which was the key reason behind last year’s shocks, is still there: the market is in a state of a fragile and unstable equilibrium,” the IGU explained, citing marginal supply growth and the need for more infrastructure de-bottlenecking.
The report added that Europe's growing dependence on LNG has rendered global gas prices increasingly vulnerable to liquefaction and shipping supply risks.
Global natural gas production in 2022 stayed flat in comparison with the previous year with a marginal 8.3 Bcm uptick, which was less than a 0.5 percent increase year-on-year.
However, the IGU said that first half of 2023 saw a mild revival in global gas supply, yet the final annual result remains uncertain.
“Looking back, the curtailment of Gazprom’s output in Russia was offset by supply growth in North America, which grew from 1,160 Bcm to 1,213 Bcm, and in the Middle East, which grew from 670 Bcm in 2021 to 687 Bcm in 2022,” the IGU said.
“In Europe, incremental production in 2022 largely came from Norway, which has been maximising output (7 percent growth year-on-year) to increase exports to the rest of the continent,” the report added.
“In Asia, gas production rose modestly from 696 Bcm in 2021 to 712 Bcm in 2022, driven mainly by higher production in China and Central Asia,” said the report.
“By contrast, Africa experienced falling gas production of 1 percent (2.9 Bcm) between 2021 and 2022,” the report stated.
