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International Energy Agency: Global natural gas demand increases or slows down sharply

Date: 2022-07-08
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According to foreign media reports, the latest quarterly report of the natural gas market released by the International Energy Agency on the 5th shows that due to factors such as soaring prices, reduced supply and weak economy, the global demand for natural gas will decrease slightly this year, and will increase slowly before 2025, but the growth rate is significantly lower than the previous forecast.

Demand slowed down sharply.

According to the report released by the International Energy Agency on the 5th, in the second half of 2021, the price of natural gas market will rise and the supply will be tight, and the Ukrainian crisis this year has further aggravated this trend. This puts great pressure on natural gas demand.

The report predicts that the global natural gas demand this year is expected to decrease by 0.5% compared with the 2021 level; It is expected that by 2025, the global demand for natural gas will only increase by 140 billion cubic meters compared with 2021, and the growth in 2021 will reach 175 billion cubic meters.

The agency's forecast for the growth of natural gas demand by 2024 is lowered by 60% compared with the previous forecast.

According to the International Energy Agency, the current record high price and supply interruption are damaging the image of natural gas as a reliable and affordable energy source, and making its development prospects face great uncertainty, especially in developing countries, where natural gas would have played an important role in meeting the rising energy demand and achieving the goal of energy transformation.

Russia's supply to the EU decreases.

Since the outbreak of the Ukrainian crisis, the West has imposed large-scale sanctions on Russia, trying to crack down on Russia's energy revenue and claiming to gradually reduce its dependence on Russia's fossil fuels. The European Union has announced that it will stop importing Russian coal in August and approve a partial oil embargo against Russia.

As a counter measure, the 'ruble settlement order' between Russia and 'unfriendly' countries and regions came into effect on April 1st. At present, Gazprom has successively announced the suspension of gas supply to European countries such as Poland, Bulgaria, Finland, the Netherlands and Denmark, which have defaulted on gas payments and refused to settle in rubles. It is not excluded that Russia will greatly reduce or even stop supplying natural gas to more countries in the next step.

Earlier in June, Gazprom reduced the supply of natural gas to Germany through the 'Beixi -1' pipeline by nearly 60% for technical reasons. Beixi Natural Gas Pipeline Company recently announced that from July 11th to 21st, it will temporarily close two branch lines of 'Beixi -1' natural gas pipeline operated by the company for routine maintenance.

According to preliminary statistics released by Gazprom on the 1st, the company's natural gas exports to non-CIS countries in the first half of the year were 68.9 billion cubic meters, a decrease of 31 billion cubic meters or about 31% compared with the same period of last year.

According to Russian gas estimates, in the first half of this year, the global natural gas consumption decreased by 24 billion cubic meters year-on-year, while that of EU countries decreased by 27 billion cubic meters in the same period.

According to the IEA, Russia's pipeline natural gas exports to the EU are expected to drop by 55%-75% due to the EU's measures to reduce its dependence on Russian natural gas. At the same time, the EU's demand for LNG will divert the energy originally destined for other regions such as Asia. According to the International Energy Agency, the shortage of LNG will inevitably lead to the price increase. The best way to deal with the current global energy crisis is to improve energy efficiency and accelerate the transformation of clean energy.

Recession pressure demand outlook

According to the report of the International Energy Agency, by 2025, the Asia-Pacific region is expected to contribute half of the global natural gas demand growth. In terms of industry, the industrial sector is expected to account for 60% of global natural gas demand. However, the agency said that these forecasts are facing downward pressure from high prices and slowing economic growth.

According to IEA data, in 2021, the EU imported 155 billion cubic meters of natural gas from Russia, accounting for about 45% of the EU's total natural gas imports and 40% of its total consumption. Fatih Birol, Director of the International Energy Agency, warned that Russia may completely cut off its gas supply to Europe, and Europe needs to be prepared now.

Analysts believe that the dependence on Russian energy has caused the EU to be 'backfired' by sanctions. Since the 'Beixi -1' natural gas delivery was cut, the European benchmark natural gas futures price has increased by nearly 50%. Energy prices in EU countries have risen sharply, driving prices in various industries to rise, and the inflation rate in some countries has reached a new high for decades. In response to inflation, the European Central Bank had to prepare for the first interest rate increase in more than 10 years, and planned to raise interest rates by 25 basis points in July. This may lead to a sharp rise in the financing costs of euro-zone countries with heavy debt burden, and increase the risk of debt crisis and economic recession.

The European Central Bank warned that if Russia completely shuts down the gas pipeline, the euro zone economy will contract by 1.7% next year.

Some analysts also pointed out that not only Europe, but also other major global economies are facing increasing recession risks.

Bank of England Governor Bailey warned on the 5th that the Ukrainian crisis has intensified the upward pressure of commodity prices and inflation, and the global economic outlook is now deteriorating, and it may face further impacts in the future. We should keep our economic resilience and be ready to respond.

According to CNBC, Rob Su ballaman, an analyst at Nomura Securities, said that many major economies in the world may fall into recession in the next 12 months, mainly because their central banks are preparing to take more aggressive action to raise interest rates to deal with inflation. Nomura expects that the United States, the euro zone, Britain, Japan, South Korea, Canada and Australia will all experience economic recession next year.


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