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Some of the lost European demand for natural gas due to the energy crisis and record-high prices could never return, Vitol Group’s chief executive Russel Hardy said at the Energy Intelligence Forum in London on Tuesday.
“For gas, demand has plummeted in Europe, with double-digit percentage reductions. We expect some of the lost demand to be permanent,” Hardy told the forum.
“Gas and power had a terrible year for demand (last year) And it continues to be very difficult in Europe ... on the industrial side because of the damage over the last few months of high prices,” said Hardy, the top executive of the world’s largest independent oil trader.
“We can expect some of that lost demand to stay lost forever,” according to Hardy.
Europe’s gas demand has trended lower for the past year amid energy savings measures, high prices last year, and demand destruction from slowing industrial activity. The EU has also set a target for member states to reduce gas consumption.
European demand for natural gas remained near the bottom of the five-year seasonal levels in August, helping inventories end the month at around 93% full, data from the Joint Organizations Data Initiative (JODI) showed on Monday.
Gas demand in the EU was 12% lower in 2022 than the 2019-2021 average, driven by falling industrial and household gas demand, researchers at Brussels-based think tank Bruegel wrote last week.
In 2023, the greater availability of alternative power generation helped with significant gas demand reduction in the power sector, too.
In the second quarter of 2023, the EU gas demand was 19% below the 2019-21 average, with gas demand for power generation down by 17%, Bruegel said.
Ahead of the 2023/2024 winter, gas storage sites in the EU were 98% full as of October 15, according to data from Gas Infrastructure Europe. Europe hit its target to have storage 90% full by November 1 months in advance.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com