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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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European Gas Demand Set For Record-Breaking Decline In 2022

  • A combination of soaring natural gas prices, an industrial slowdown, and energy-saving measures has sent European gas consumption falling.
  • The International Energy Agency has forecast a 10% drop in annual gas demand in Europe, the largest drop on record.
  • The pain is far from over for Europe, with Europe facing another year of gas consumption contraction in 2023 as markets remain tight.

Soaring natural gas prices, demand destruction in the industrial sector, and energy-saving measures are set to reduce gas consumption in Europe’s developed economies by 10% this year, the biggest drop in European demand in history, the International Energy Agency (IEA) said in its quarterly Gas Market Report on Monday.

The forecast of a 10% decline in natural gas demand in OECD Europe reflects the expectation of higher gas prices and the EU’s ambition to reduce gas consumption by 15% between August 2022 and March 2023 compared to its five-year average.

“Assuming average weather conditions, gas demand in the residential and commercial sectors is expected to remain below 2021 levels,” the IEA said in its report.

Due to sky-high high prices and a very tight gas market, natural gas usage in the power generating sector in Europe is forecast to drop by nearly 3% this year. Industrial gas demand is expected to plunge by as much as 20%, the IEA said.

Energy-intensive industries in Europe, including aluminum, copper, and zinc smelters and steel makers, have already warned EU officials that they face an existential threat from surging power and gas prices. 

After a record slump in gas demand this year, Europe faces another year of gas consumption contraction in 2023, when OECD Europe’s demand is forecast to decline by 4% amid high prices, according to estimates from the IEA. The agency also noted that “Further potential disruption to the supply of Russian gas provides additional downside risk to this outlook.”

Keisuke Sadamori, the IEA’s Director of Energy Markets and Security, commented on the report: “The outlook for gas markets remains clouded, not least because of Russia’s reckless and unpredictable conduct, which has shattered its reputation as a reliable supplier. But all the signs point to markets remaining very tight well into 2023.”

The IEA’s Executive Director Fatih Birol said last week that the gas market could be even tighter next year compared to already tight LNG markets in 2022.   

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on October 03 2022 said:
    The International Energy Agency (IEA) didn’t produce an earth-shaking research to project a 10% drop in annual gas demand in Europe. The EU Secretariat asked its members to have a compulsory reduction of 15% in their gas consumption between August 2022 and March 2023.

    Still, the EU has yet to fill its gas stores with the probability that Europe will freeze this winter.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert
  • DoRight Deikins on October 03 2022 said:
    One thing that you failed to mention is the restoration, fuel-switching, and maximization of under-utilized installations using coal and oil. And an increase in the use of biomass. You know, all those fuels that produce real pollutants!
  • George Doolittle on October 03 2022 said:
    I think the problem is the British Pound and the Euro are being made to be worthless at the moment as obviously there is no actual energy shortages upon all of Europe at this current price that can't be made whole and then some by the Netherlands alone let alone Great Britain. Oddly enough there might beget a massive food crisis outside of Ukraine if the current policies effected for posting up a clearly teetering on the brink Putinism doesn't dramatically change immediately.

    Turkey raging away into Hyperinflation is hardly encouraging as well. How hard is it for Europe to intervene in Libya by way of example? Anyhow as rocket fuel Methane has proven to be quite problematic is bad news for the natural gas bulls in the USA 2022. Certainly great news for US Industrial output tho!

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