North American Coal Retirements, Asian LNG Demand Drive Global ... - Natural Gas Intelligence

North American Coal Retirements, Asian LNG Demand Drive Global Natural Gas Rebound in 2023, GECF Says - Natural Gas Intelligence

LNG| Daily GPI| International| NGI All News Access

North American Coal Retirements, Asian LNG Demand Drive Global Natural Gas Rebound in 2023, GECF Says

Global natural gas consumption is expected to rebound this year as easing price volatility and rising economic activity boosts LNG imports from China and South Asia and North America’s power market continues to cut coal-fired capacity, according to the Gas Exporting Countries Forum (GECF).

Researchers with the organization headquartered in Qatar in the annual report said gas consumption could grow to an all time high through 2024. Gas consumption had been trending upward after collapsing during the Covid-19 pandemic, but demand reversed again in 2022.

A combination of mild weather, high liquefied natural gas prices and the invasion of Ukraine last year led to a 0.4% decline, reducing gas consumption to 4.03 trillion cubic meters (Tcm). This year, policies to cut emissions from the North American power sector and a surge of LNG demand in Asia is expected to boost consumption by 1%.

Asia is anticipated to have a 4-4.5% year/year boost in LNG imports in 2023, with global imports increasing by 16-18 million tons (Mt) to around 416 Mt.

“China and countries in the Indian subcontinent and Southeast Asia are forecasted to account for the bulk of incremental increase in LNG imports with an additional 13-15 Mt of LNG imports,” researchers wrote.

In the United States, the rising price of coal and the continued retirement of coal generation capacity last year helped fuel a 5.4% rise in gas consumption to 905 Bcm. Canada’s gas consumption also rose with a 4% jump to 139 Bcm.

In 2023, GECF estimated North American gas consumption would largely stay the same or slightly decline year/year as renewable generation increases. Lowering coal prices could also eat into gas’s gains in the power sector from last year, researchers wrote.

Gas consumption in Latin America and the Caribbean is also expected to continue a decline this year after dropping 2.7% last year to 150 Bcm.

“In 2023, regional gas demand is forecasted to decline by 1%, driven mainly by the recovery in hydro and renewables output and lower LNG imports as a result of high prices,” researcher wrote of Latin America.

Europe’s abrupt rush to replace Russian pipeline gas led to a 6%, or 21 Mt, jump in global LNG imports last year, despite an overall decline in gas consumption. While Europe is placed to exit winter with natural gas storage well above the five-year average, GCEF estimated the region’s consumption could drop another 3% year/year.

China and India led the decline in gas consumption for Asia during 2020. China, which holds a large collection of long-term LNG contracts, relied on domestic production and storage for most of the year while Covid-19 restrictions tamped down consumption by 1.3% year/year. India saw a 4.3% decline in gas consumption while heighted prices drove gas-to-coal switching in its power generation sector.

While coal saw a resurgence in both Asia and Europe last year, researchers wrote record tightness in the coal market and climate goals will mean “power generation will likely remain the largest driver of global gas consumption, as more countries transition away from coal-fired power plants.”

Three new countries–Estonia, the Philippines and Vietnam– were expected to become LNG importers this year. Finland and Estonia partnered on a floating storage and regasification unit at the Port of Inkoo that received its first commissioning cargo last month. Germany and El Salvador joined the new importer club last year.

Vietnam is expected to receive a commissioning cargo during the summer to launch distribution from the Thi Vai LNG import facility. India also launched its seventh LNG import terminal and its first on the eastern seaboard earlier in the month. Dhamra LNG, a joint venture between TotalEnergies and Adani Group, received an inaugural cargo from Qatar Gas on April 3.

Despite a quiet start to the year for LNG markets, GECF expects spot prices to remain volatile during the year. High exports levels, especially from the United States, and the risk of global recession “may exert downward pressure.” However, there is also the expectation that greater demand from Asia and industrial sectors could spike prices.

Additionally, any further supply disruptions or extreme weather conditions during the year may also boost prices,” researchers wrote.

© 2023 Natural Gas Intelligence. All rights reserved.

ISSN © 1532-1231 | ISSN © 2577-9877 |