Natural gas demand in Europe slumped to a 10-year low last year as consumption has tumbled by 20% since the Russian invasion of Ukraine two years ago, the Institute for Energy Economics and Financial Analysis (IEEFA) said in a new report on Wednesday.
Soaring installations of renewable power capacity and measures to boost energy efficiency drove Europe's gas consumption to the lowest in 10 years in 2023, and peak LNG demand in the continent could come as early as next year, IEEFA said.
Large economies including Germany, Italy, and the UK were the biggest drivers of the falling European gas demand, according to the institute.
European gas demand slumped in 2022 and 2023 due to the energy crisis, the record-high benchmark gas prices in 2022, and weaker industry demand amid faltering economies. Household consumption has also dropped due to energy-saving measures, while European governments looked to boost the share of renewables in power generation and ditch Russian gas, when and where possible.
In the EU alone, i.e. excluding the UK, the bloc's dependence on Russian gas - both LNG and pipeline - slumped from 45% in 2021 to 15% in 2023, the European Commission said last week.
To offset the significantly lower intake of Russian gas, Europe has rushed to build many LNG import terminals.
According to IEEFA's analysis published today, with peak LNG demand expected in 2025, the combined capacity of Europe's LNG terminals could be three times higher than its expected LNG demand by the end of the decade.
Germany, for example, may end up using less LNG import capacity than it has planned to roll out this decade, but better safe than sorry, Markus Krebber, the chief executive of the top German utility, RWE, said last year.
INES, the group of German gas storage operators, said in its August gas update that Germany would continue to be at risk of natural gas shortages until the 2026/2027 winter season unless it takes measures to add LNG terminals, additional gas storage capacity, or pipelines.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More