BAKU, Azerbaijan, Feb.25
By Leman Zeynalova – Trend:
In the short-term, the impact of the COVID-19 outbreak has depressed gas demand across Europe, and the region’s ability to continue to act as the market of last resort is under question, Trend reports citing the Gas Exporting Countries Forum (GECF).
“However, over the mid- to long-term, policies that support gas are the main driver of demand in Europe. It is also noteworthy that gas imports to Europe continue to benefit from very low prices, in particular piped imports, which helps sustain gas demand growth. On the other hand, natural gas production in European countries continues to decline along with demand, and therefore Europe needs to fill its supply-demand gap by pipelines and LNG imports. Over the outlook period, Europe’s gas trade is projected to decline to around 450 bcm by 2050, of which 64 percent or around 290 bcm will be imported by pipeline,” GECF said in the latest report.
Almost all European countries witnessed declining gas output in 2019. Most of the decline in recent years is due to the cut in production at the Groningen field and a reduction in other existing projects in the North Sea. In 2019, gas production in the Netherlands reduced by 13 percent, not only due to the fall in production from its largest field at Groningen, but also from smaller reductions in output from so-called ‘small fields’ in the country, which declined by around 2 percent. This downward trend was also witnessed in the first half of 2020 in the period before and after the lockdown imposed by the pandemic. This bearish trend is expected to remain over the outlook period. This Outlook forecasts that all European gas producers will see their production much decreased by 2050 except Cyprus which emerges as a producer and where levels of production will increase by more than 10 bcm over the outlook horizon.
In the short- and medium-term the Outlook expects that some European producers such as Norway and the UK will maintain their levels of production through investment in the upstream sector especially in the resource-rich North Sea area. But after around 2030, the trend is expected to turn downwards. Currently, natural gas production in Europe accounts for 5.2 percent of total global production. The region is forecast to be the only region to sustain a decline in gas production, with significant negative average annual growth expected of around 3.2 percent over the forecast period which will downgrade the share of the region in global gas production to 1.3 percent.
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