BAKU, Azerbaijan, December 18. Overall 8 percent decline is expected in European gas demand for the full year 2023, Trend reports citing the Oxford Institute of Energy Studies (OIES).
“Throughout 2023 until November, the estimated year-on-year decline in total European gas demand was substantial at 8.1 percent. Notably, the power sector experienced a significant drop of 19.1 percent in demand, while the industrial sector saw a more moderate reduction of 5.1 percent. Conversely, residential and commercial sectors observed a 2.7 percent increase, attributed to a recovery in gas usage from businesses in Q2 and Q3, coupled with brief periods of cold weather in late October and November balancing lower heating demand in Q1. Considering the icy start to December, we project an overall 8 percent decline in European gas demand for the full year 2023,” said the OIES.
While acknowledging the persistently weak macro-economic outlook in Europe, with Germany teetering on the edge of a recession and other major economies nearing contraction, the apparent recovery in the industrial sector since the summer suggests that some losses experienced in 2022 may not be structural. It implies that gas demand from Europe's industrial sector may be temporarily diminished, with limited destruction, at least for the time being. The trajectory of this sectoral recovery during the winter months will serve as confirmation, although demand for end-products (chemicals, steel, glass, and nonferrous metals) may act as a limiting factor on any industrial gas demand recovery in the upcoming months.
Contrary to industrial gas demand, the power sector shows no signs of recovery, with gas demand remaining markedly weaker than the previous year. Factors such as the gradual return of French nuclear plants post-extensive maintenance, ongoing expansion of renewables across the continent, and healthier water levels supporting hydro capacity utilization point towards a more structural challenge to gas' market share in the power sector.
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