The sharp drop in gas prices in recent months, reaching the lowest level since the beginning of the energy crisis, is beginning to reactivate demand. The International Energy Agency (IEA) projects for this year a 2.5% increase in global consumption of this fuel, essential for industry, heating and electricity generation. The growth contrasts with the meager 0.5% in 2023 and will be especially significant in the first segment, manufacturing, where several sectors “sensitive” to the price of this molecule will “reincrease” their demand.
“The global gas market is entering a new period, as the world gradually emerges from an energy crisis that has had a great impact on both supply and demand,” said this Friday the head of Energy Markets and Security of the Agency, Keisuke Sadamori. “We expect solid growth in global consumption, after prices have returned to relatively manageable levels. “The speed with which this new demand can be met will be crucial, especially given that supply remains limited and new liquefied natural gas capacity [GNL, el que viaja por barco] It will only be available after 2024.”
In the hands of geopolitics
In 2023, the supply of natural gas remained “relatively tight”, largely because the new LNG processing capacity – which involves the liquefaction and freezing of the fuel to be able to transport it in LNG tankers, and which is being key for the EU is being able to save the ball from the crisis—has fallen “below” what was expected by the energy arm of the Organization for Economic Cooperation and Development (OECD). “Consequently,” IEA technicians write, “production growth was not sufficient to compensate for the continued decline in Russian gas pipeline deliveries to Europe.”
Geopolitics has become, in the last two years, the main destabilizing factor in energy markets. And so it will continue to be in the coming times. “It is the biggest risk factor for global gas markets in 2024. The Russian invasion of Ukraine, tensions in the Middle East and deliberate interference with critical infrastructure, such as gas pipelines, have the potential to increase volatility,” reads the monograph published this Friday.
Last year, China surpassed Japan and South Korea and once again regained its position as the world’s largest importer of LNG, with an increase in demand of 7%. The other side was the EU, where although the weight of liquefied gas grew substantially – to compensate for the much smaller arrivals through the gas pipelines that connect it with Russia – the general demand for this fuel fell by 7% to its lowest level. since 1995. Much of this decline is attributable to the slowdown of German industry, the most powerful on the continent and—also—the one that has contracted the most.
LNG enters the US electoral fray
Since the start of the energy crisis, 80% of new global LNG supply capacity has come from the United States. This increase has already made it the largest supplier on the Old Continent. But that may change in the coming years: President Joe Biden announced this Friday a moratorium on the construction of new LNG export terminals, citing the climate crisis as reasons. “It is an existential threat in our time,” emphasized the Democrat, already in the pre-campaign for the elections on November 5.
The announcement has no short-term impact: the flow of LNG tankers across the Atlantic Ocean will remain unchanged in the coming months. However, it does call into question the ability of the United States to maintain its long-term leadership in the table of natural gas exporters: neither Qatar nor Australia, the two countries that are lagging behind, have plans to lift the foot in the LNG marketing business. The North American giant has seven active liquefaction terminals today and most of its production ends up in Europe and Asia.
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