Int. Energy Agency predicts stronger global gas demand growth in 2024 amid geopolitical uncertainty

Global gas demand growth is expected to surge in 2024 due to colder winter conditions and lower prices, the International Energy Agency’s (IEA) latest report on Friday showed, while warning of renewed price volatility amid geopolitical uncertainties, Azernews reports.

“In 2023, global gas demand rose by just 0.5%, as growth in China, North America and gas-rich countries in Africa and the Middle East was partially offset by declines in other regions,” said the Paris-based energy agency in its latest Gas Market Report.

According to the report, following the loosening of COVID-19 restrictions and the revival of economic activity, China regained its position as the world’s largest LNG importer, with an increase in its natural gas demand rate of 7%.

Meanwhile, natural gas consumption in Europe fell by 7%, reaching its lowest level since 1995. The report said the rise of renewables and increased nuclear power available in Europe and mature Asian markets contributed to a decline in natural gas demand, leading to lower prices.

The report predicts a growth of 2.5%, or 100 billion cubic meters (bcm), in the global demand for gas this year.

“Expected colder winter weather in 2024, compared with the unusually mild temperatures experienced in 2023, is likely to bring increasing demand for space heating in residential and commercial sectors,” it added.

“Natural gas prices have fallen sharply following the record highs seen in 2022, which is also supporting the recovery in gas demand,” it added.

The report said tight conditions are forecast for supplies in 2024, similar to last year, with a limited increase in global LNG output expected to restrain demand growth, especially for Europe and the mature Asian markets.

LNG supplies are projected to increase by 3.5% this year, compared to the 8% growth rate seen between 2016 and 2020. Delays in new liquefaction plants and challenges with feedgas availability at existing projects could push back supply growth to 2025.

Geopolitical uncertainties are the biggest risk factor for global gas markets in 2024, the report said. “Russia’s invasion of Ukraine, heightened tensions in the Middle East, and concerns over deliberate interference with critical infrastructure such as pipelines all have the potential to generate further volatility.”

Commenting on the report, Keisuke Sadamori, IEA director of energy markets and security, said: “We expect to see solid growth in global gas demand this year as prices have come down to relatively manageable levels. But the speed at which this new demand can be met will be critical, particularly as supplies are tight and substantial new LNG capacity will only come online after 2024.”