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Global gas consumption to continue growth in 2023 – report

1st September 2023

     

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Global gas consumption is expected to continue growing in the latter half of this year, mainly driven by increasing energy demand in China, the US and some emerging countries in Asia Pacific, says the Gas Exporting Countries Forum’s (GECF’s) Monthly Gas Market Report, released last month.

China’s apparent gas consumption surged by 11% year-on-year, totalling 33-billion cubic metres, according to the GECF’s report.

Foremost among the drivers is the rebound in economic activity following the strict Covid-19 lockdown measures enforced in previous years. Additionally, there has been an increased reliance on natural gas in the power sector resulting from an 18% year-on-year decrease in hydroelectric availability.

Further, the heatwave that has impacted on the southern regions of China since May this year has increased cooling demands in China, contributing to mounting natural gas consumption in the country.

China’s natural gas consumption is projected to continue its recovery in the latter half of the year. In China’s power generation sector, natural gas is set to play a crucial role as a reliable backup for the extensive deployment of solar and wind farms throughout the country.

This is expected to stimulate natural gas consumption in the power generation sector in the years ahead.

“For the year 2023, we forecast an overall growth of [about] 6% in Chinese natural gas consumption compared with the previous year,” says GECF’s report.

Gas consumption in the US has also increased by 0.2% year-on-year, reaching 73-billion cubic metres.

In the first half (H1) of the year, the US did record a modest decline of 0.5% compared with H1 2022, reaching a total level of 456-billion cubic metres, which was largely driven by an 8.4% (seven-billion cubic metres) decrease in the residential sector and a 7.4% (four-billion cubic metres) decrease in the industrial sector.

The drop in the residential sector was largely owing to the mild winter experienced in the US during 2023’s first quarter.

However, an increase of 7% in the power generation sector, representing a rise of ten- billion cubic metres, compared with H1 2022, offset the overall decline. This growth was the result of a switch from coal to gas because of lower natural gas prices, a decrease in hydropower output owing to drought in certain US regions and a reduction in wind output during the same period.

GECF anticipates that natural gas consumption in the US will continue to recover in the second half of the year. The power generation sector is expected to drive this growth as the ongoing drought situation is expected to persist, and attractive natural gas prices will enhance its competitiveness in the power generation mix compared with coal.

“For the year 2023, we predict an increase of 0.3% to 0.5% compared with 2022, marking the third consecutive year of growth in the US,” says the GECF’s report.

In several other global regions, the GECF has observed a recovery of gas consumption attributed to the influence of lower spot prices, mainly in the price-sensitive countries of South and South-East Asia .

Decline in the EU
In contrast, the European Union (EU) has experienced a substantial 12% year-on-year decline in gas consumption and is expected to continue this trend.

The decline in gas consumption in the EU is attributed to a rise in renewable-energy production, especially solar, which resulted in reduced reliance on gas in the EU’s power generation mix.

Further contributing factors include the exceptionally warm winter that the EU experienced during the first quarter of 2023. Elevated temperatures recorded during this period significantly impacted on heating demand in the residential sector resulting in a decrease.

Additionally, the implementation of EU regulations promoting a voluntary 15% reduction in gas demand until March 2023, coupled with its subsequent extension for an additional year (from April 1, 2023 to March 31, 2024), played a significant role in suppressing gas consumption in the residential, commercial and industrial sectors.

According to the report, for the latter half of the year, the likelihood of observing similar trends in natural gas consumption across Europe remains notably high.

“For the year 2023, we are projecting a decline in the range of 8% to 10% in comparison to 2022,” says the GECF’s report.

Edited by Nadine James
Features Deputy Editor

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