European LNG Imports Forecast To Rise By 60Bln Cubic Meters In 2022 - Report

MOSCOW (UrduPoint News / Sputnik - 03rd October, 2022) Europe's liquefied natural gas (LNG) imports are set to grow by 60 billion cubic meters in 2022, far outstripping new LNG export capacities and putting strain on the international market, the International Energy Agency stated in a report released on Monday.

"Europe's LNG imports will increase by over 60 billion cubic metres (bcm) this year, or more than double the amount of global LNG export capacity additions, keeping international LNG trade under strong pressure for the short- to medium-term," the IEA said in its press release regarding its latest Gas Market Report, which covers the fourth quarter of 2022.

The report stated that Europe's LNG demand surged 65% year-on-year, contributing to a 6% expansion of global LNG trade, and triggering a realignment of trade flows. This demand shock was partly absorbed by a 7% fall in demand in the Asia Pacific region caused by mild weather, high prices and COVID-related disruption in China,

The sudden increase in European demand for LNG was caused by a drop in natural gas imports from Russia, following the start of its military operation in Ukraine and retaliatory sanctions on its financial sector. Russia's piped exports to OECD Europe declined by an estimated 40% year-on-year in the first eight months of 2022, the IEA reported.

However, LNG imports from elsewhere have not been sufficient to cushion the shock, and soaring energy prices have led to a sharp drop in consumption.

"Natural gas demand in OECD Europe fell by close to 10% y-o-y in the first eight months of 2022 and by an estimated 9% y-o-y in Q3. This was driven by milder temperatures in Q1-2 and record high gas prices weighing on gas use in both the industrial and power sectors," the IEA said.

Industrial gas demand fell by an estimated 15% year-on-year in the first eight months of 2022, plummeting by over 25% in the third quarter. Moreover, 70% of European fertilizer production capacity had been curtailed by the end of August, according to Fertilizers Europe.

The IEA conducted a seasonal resilience analysis of the European market. It concluded that in the event Russia completely cut off piped gas supply on November 1, then even with a high level of LNG supply, Europe would only have 20% of gas in storage by February 2023, leaving it vulnerable to a late cold spell. The IEA has called for measures to curtail European gas demand by 9 to 13% to head off possible energy crisis.