BAKU, Azerbaijan, July 9. For the rest of the 2022 (and 2023), what happens in the power sector is expected to be a major driver for gas demand, Trend reports with reference to Oxford Institute of Energy Studies (OIES).
OIES notes in its latest report that some possible coal-to-gas switching could take place over the summer, due to higher coal and EUETS prices and the ban on Russian coal imports from 10 August.
“However, many governments and companies are counting on coal to help balance the system this winter, and gas-to-coal switching is very likely in order to redirect gas to other sectors with less flexibility to switch to alternative options. All these factors are likely to increase the call on gas-fired plants in the coming months, especially on low-wind availability days. A cold winter would also boost gas demand and any signs of colder weather could tighten the market dramatically if it happens when there are low supplies of alternative options for power generation, as seen in Q4 2021 for instance,” the Institute experts believe.
The report reveals that the impact of high gas prices on industrial demand is expected to continue.
“Since Q3 2021, industries have expressed strong concerns about the impact of rising gas (and more generally energy) prices on their activities and demanded financial support from governments to keep production levels steady. In 2022, there have been clear signs that high gas prices have impacted demand for gas in the industrial sector with some important year-on-year reductions and maybe even demand destruction (i.e., demand that will not come back). Interestingly, manufacturing outputs appear to be similar or above 2021 levels in various markets while gas demand shows sharp declines in these countries, suggesting that some switching from gas to other fuels has also been happening,” OIES says.
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