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European gas demand to recover to pre-crisis level in 2021

Oil&Gas Materials 19 April 2021 09:58 (UTC +04:00)
European gas demand to recover to pre-crisis level in 2021

BAKU, Azerbaijan, Apr.19

By Leman Zeynalova - Trend:

Following strong growth in Q1, European gas demand is expected to increase by 3 percent in 2021, recovering to its pre-crisis levels, Trend reports citing the International Energy Agency (IEA).

The sharp increase in carbon prices is expected to support additional gas burn in the power sector through the summer, while industrial gas demand is expected to continue its recovery amid improving economic conditions, according to IEA’s report.

“European gas consumption rose by over 5 percent y-o-y during the 2020/21 heating season, driven by colder winter temperatures, a higher gas burn in the power sector and a gradual recovery in gas demand in industry. Heating degree days averaged 10 percent higher compared to the 2019/20 heating season across Europe’s main gas-consuming regions. Distribution network consumption increased by an estimated 6 percent y-o-y, supported by the higher space heating requirements in the residential sector. Demand growth was particularly strong during January and February, which faced several cold spells,” reads the report.

The sharp drop in temperatures during the first half of February, together with lower wind generation, propelled European daily gas demand to a high of 2.4 bcm/day on 12 February, topping the daily gas consumption levels seen during the “Beast from East” of March 2018, according to IEA.

The report shows that the sharp increase in demand did not lead to price spikes, as supply remained stable, supported by a combination of larger storage withdrawals, a ramp-up in pipeline supplies and greater LNG send-out.

“Gas-to-power demand increased by an estimated 4 percent y-o-y during the 2020/21 heating season. The decline in nuclear power output (down 2 percent y-o-y), together with lower wind generation (down 6 percent y-o-y), created additional market space for thermal generation, most of which was captured by gas-fired power plants. Coal- and lignite-fired generation remained subdued, and increased by a mere 1 percent y-o-y.”

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