Europe cuts gas demand by a quarter to lose dependence on Russia | Popgen Tech
EU countries cut gas demand by a quarter in November even as temperatures fell, in the latest evidence that the bloc is managing to reduce its dependence on Russian energy since Moscow’s full-scale invasion of Ukraine.
Preliminary data from commodity analysis company ICIS showed gas demand in the EU was 24 percent below the five-year average last month, following a similar drop in October.
European countries have tried to reduce their dependence on Russian gas and oil by finding alternative sources or making changes to limit demand.
They have been helped by an unseasonably warm autumn, although temperatures have dropped closer to normal levels in the past two weeks.
In Germany and Italy, the EU’s two biggest gas-consuming countries, demand fell 23 and 21 percent respectively in November, ICIS found. In France and Spain it fell by more than a fifth and in the Netherlands by just over a third.
“Industry is proportionally driving the largest reduction in gas consumption, and this is entirely the result of clear market prices,” said Tom Marzec-Manser, chief European gas analyst at ICIS. The high gas price has “discouraged” use, he added. In 2021, the EU imported 155 billion cubic meters of natural gas from Russia, accounting for around 45 percent of EU gas imports and almost 40 percent of its total gas consumption.
Europe also imposed sweeping new restrictions on Russia’s oil exports to limit its use of that energy source as well.
The EU’s ban on Russian oil imports by sea came into force on Monday. G7 leaders have since agreed to introduce a so-called price cap aimed at keeping Russian oil flowing to countries such as India and China to avoid creating widespread shortages, but only if crude falls below $60 a barrel be sold to shrink. Moscow’s income.
However, industry executives and analysts warned that without further declines in demand and more imports of LNG, gas shortages could persist in Europe for years.
“The demand will have to be lower than before [Russia-Ukraine] war levels to get enough supplies” for next winter, said Alex Tuckett, head of economics at consultancy CRU Group. “The question is how much demand reduction and how painful it will be.”
The drop in demand meant gas storage facilities in the EU were at 95 percent capacity by mid-November, according to industry body Gas Infrastructure Europe, close to an all-time high. Record inflows of LNG into the region have also helped.
But colder weather in recent weeks has increased demand and storage facilities are now at about 93 percent capacity.
At the same time, prices rose. Dutch TTF gas futures, the European benchmark contract, are trading near €150 per megawatt hour, the highest in more than a month, but still only half the €300/MWh they briefly reached in August.
Higher gas prices are a burden on households and businesses, but they have enabled Europe to attract record volumes of LNG because of the premium it pays over other buyers.
ICIS data showed that Europe and the United Kingdom imported 11.14 million tonnes of LNG in November, a record monthly high, and are on track to receive 12.2 million tonnes in December.
Marzec-Manser added a note of caution about Europe’s planned cap on gas prices.
“Any move to cap wholesale gas prices could jeopardize Europe’s ability to insure [LNG] supply, not just this winter, but for next winter and beyond,” he said. “If Europe [is] not the premium global gas market, this will lead to a reduction in imported cargoes at a time when it is most needed.”