China and Europe to Drive LNG Demand Growth This Year

China and Europe will lead the increase in demand for liquefied natural gas this year, a senior executive from TotalEnergies has forecast.

"LNG has continued to grow, with China being back in the market but not yet at the level of 2021," Thomas Maurisse, VP of Asia Exploration & Production, said at an industry event as quoted by Reuters.

"With Europe ... it's a new and big market, this demand will still continue to grow. At the same time, new capabilities will not be on stream in this very short term, so will continue to put a bit of pressure on prices and volatility."

The latter part of the forecasts may be less certain than the former, with the European Commission recently indicating it aimed to keep an eye on gas consumption and keep it subdued as much as possible.

Earlier this week, the European Commission proposed that EU member states continue taking voluntary measures to maintain a collective 15% gas demand reduction compared to the five-year average to March 2022, as the bloc looks to continue stabilizing its energy and gas supply.

Even so, TotalEnergies is the latest energy major to foresee a bright future for natural gas. Fellow supermajor Shell said earlier this month that it expected LNG demand to surge by 50% in the years to 2040. That demand growth, Shell said, would be led by China and wider Asia as emerging economies in the region switched from coal to natural gas to power their economies.

Demand for LNG has started to pick up lately as prices softened, which in turn was driven by weaker demand in the key Asian and European markets. Asian demand is particularly sensitive to LNG prices as they have weaker financial means than European buyers. As the last two years have shown, it takes one price spike for a lot of Asian buyers to rethink their appetite for LNG.

By Irina Slav for Oilprice.com

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