European gas demand saw steepest drop in recorded history in 2022: IEA 

The agency also said global demand is expected to be broadly flat in 2023.

Natural gas markets worldwide continued to tighten last year, despite global consumption declining by an estimated 1.6 percent in 2022, the report said.

Demand is forecast to remain flat in 2023, but the outlook is subject to a high level of uncertainty, particularly in terms of Russia’s future actions and the economic impacts of fluctuating energy prices, WAM reported.

Unprecedented price rises led to a 13 percent reduction in Europe’s gas demand as governments responded swiftly with emergency policies, industry scaled back production, and consumers dialled down thermostats.

Milder winter weather conditions also helped reduce space heating needs.

Gas demand in Asia dropped by 2 percent as a result of high liquefied natural gas (LNG) prices, Covid-related disruptions in China and consistently mild weather in Northeast Asia.

LNG was a particularly dynamic area in 2022 as the value of global trade hit an all-time-high, doubling to $450 billion.

Traded volumes increased by 6 percent, slightly slower than 2021, once again highlighting the distortive impacts that sharp rises in energy prices have had on global economic activity.

Europe was the primary driver behind the increase in LNG demand as it pivoted away from Russian pipeline.

LNG cargoes delivered to Europe increased by 63 percent last year.

Natural gas prices, although still high by historical standards, have fallen in recent months. However, that could change in 2023 as demand for LNG picks up in Asia, particularly in China. As the world’s largest importer of natural gas, the country recently lifted its Covid restrictions, which stifled domestic demand throughout last year.

China’s domestic LNG demand could increase by 10 percent in 2023, but current forecasts are highly uncertain.

In a bullish scenario, China’s renewed demand growth may be as high as 35 percent if prices continue to fall and general economic activity recovers swiftly.

This would spark fierce competition in international markets and could see prices return to the unsustainable levels seen last summer, representing a concern for European buyers in particular.

“Last year was extraordinary for global gas markets. Prices are returning to manageable levels, particularly in Europe, where a mild winter and demand destruction have helped to cool markets,” said Keisuke Sadamori, the IEA’s Director of Energy Markets and Security.

“China is the great unknown in 2023. If global LNG demand returns to pre-crisis levels, that will only intensify competition on global markets and inevitably push prices up again,” he said.