IEA: Global gas markets gradually regain balance

International Energy Agency said on Thursday that global gas markets are gradually rebalancing, yet supply is expected to remain tight in 2023 amid lower gas shipments through Russian pipelines to Europe.

According to Reuters, European and global gas markets suffered a major supply shock in 2022 when Russia cut its gas shipments through pipelines to the European Union by 80 percent, which led to a global crisis in the energy sector.

The mild weather, the increase in liquefied natural gas exports, and the strong decline in gas demand helped mitigate the shock, keeping stocks in Europe at 60 percent.

“Improving expectations about gas markets in 2023 is not a guarantee against future fluctuations,” the agency said in its quarterly report on the gas market. “Global gas supplies are expected to remain scarce in 2023, and the balance (in gas markets) worldwide It faces an unusually widespread blur.”

Renewed market tensions and price volatility could result from risks, which include bad weather such as a dry summer as well as reduced LNG supply and the possibility of a further decline in Russian supplies to Europe.

LNG now accounts for two-thirds of Europe’s gas imports, and meets about a third of its gas demand during the 2022-2023 heating season. European LNG imports rose 25 percent, or 20 billion cubic meters, during the heating season, and the United States provided more than 45 percent of the additional supplies.

But the global supply of LNG is expected to increase by only four percent (or more than 20 billion cubic meters) in 2023, which will not be enough to compensate for the expected decrease in gas supplies through Russian pipelines to Europe.