BAKU, Azerbaijan, June 21. The near-term gas demand outlook for Europe is poor, as spiraling energy costs squeeze consumption, Trend reports with reference to Fitch Solutions.
The company says in its latest report that despite this, Europe has seen near-record inflows of LNG this year, with a healthy price premium over Asia dragging spot cargoes to the West.
“Similar dynamics are in play over the long term. Over 2021-2031, we forecast regional gas demand to decline by 42bcm (3.5 percent), as overall energy demand growth slows and gas loses ground to alternative energies, notably in the power sector, where its share in total generation shrinks from 26.7 percent to 18.6 percent. Despite this, we forecast net LNG imports to rise by 28bcm (29 percent) over the same period. In part, rising imports are needed to offset deepening declines in regional output, including in all three major producers, Norway, the UK and the Netherlands,” reads the report.
The report reveals that import demand has enjoyed a further lift from the Ukraine conflict, with the EU and UK pledging to substantially reduce imports from Russia, currently the region’s major supplier.
“Both Germany and Italy have already locked in contracts for new floating regasification and storage units, with other markets expected to follow suit. Globally, we forecast net LNG imports to rise from 489bcm in 2021, to 730bcm in 2031. Growth will be relatively broad-based, with all the major importing regions ratcheting up strong gains over the forecast period. LNG spot prices look set to stay elevated for several years, while high oil and gas hub prices are bleeding through into contract pricing. The record high spot prices reached earlier in the year has led to some demand destruction among more price-sensitive buyers, but price levels have since moderated and our demand outlook has not materially been weakened by our upwardly revised medium-term price expectations. Natural gas has an important role to play in the energy transition in many markets, particularly in Asia, while LNG is gaining on piped gas as the more flexible source of supply.”
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