Global Gas Report 2023: The unprecedented demand uncertainty and insufficient level of investment in natural gas, low-carbon, and renewable gases are putting the energy transition at risk, undermining energy affordability, security, and sustainability.
- Having demonstrated significant resilience in the face of extreme shocks through 2022, the global gas industry came out of the most turbulent year in its history more agile and adaptable than ever, yet the global gas market is still in an unstable equilibrium in 2023.
- The gas market remains undersupplied, highly sensitive to fluctuations on supply and demand sides.
- Massive divergences across international energy and gas demand outlooks vis-à-vis low investments in natural gas, low carbon and renewable gases, fuels risk of worsened energy shocks toward 2030 and beyond.
- Natural gas, low carbon and renewable gases play a pivotal role in decarbonising energy systems around the world, helped by the adaptability of LNG infrastructure that delivers critically needed flexibility.
- A strengthened focus on comprehensive energy planning, low-carbon gases development, robust conservation measures to reduce demand, and CCS will determine the success of the energy transition.
As a consequence of the supply and price shocks coming on the heels of the Russia-Ukraine crisis, global gas demand decreased by 1.5% in 2022 compared to 2021. The largest declines were recorded in Europe and Asia and were partially offset by strong growth in North America. Europe’s gas demand decreased by almost 12% in 2022. Spikes in international LNG prices caused the demand in Asia to fall by 18 Bcm (1.9%) in 2022, with significant demand destruction seen in South Asia, where unaffordable LNG prices led to gas shortages and blackouts. Pakistan and Bangladesh were hard hit and saw a 12% and 15% gas drops, respectively in 2022. On the contrary, North America’s gas demand grew by 4.8% in 2022, as the North American prices remained largely isolated and affordable. In the first half of 2023, China saw gas demand grow at 5.4% year-on-year to reach 194 Bcm.
Snam CEO, Stefano Venier highlighted:
“As part of a more and more interconnected global market, the European gas system managed to overcome the enormous challenges faced in 2022, also thanks to the flexibility provided by LNG and the further diversification of gas supplies, which brought storages almost at full capacity ahead of the winter season. It is important to continue investing in gas infrastructure to secure reliable and affordable natural gas supply and accelerate the development of green, low-carbon gas and CCS, considering the key role that molecules will play in the energy mix of the near and longer future”.
Global gas production in 2022 stayed flat with a marginal 8.3 Bcm or less than 0.5% uptick, keeping the global gas in short supply. The curtailment of Russia’s output in 2022 was offset by supply growth in North America, the Middle East, Europe and Asia, roughly balancing out the volume of available gas supply in the market to the pre-Russia-Ukraine war level. Africa experienced a small drop in gas production between 2021 and 2022.
Natural gas prices remain above pre-covid and pre-energy crisis levels in H2 2023, yet prices cooled from the record-breaking heights of 2022. Price reduction in 2023 largely came from dropping demand, mostly in Europe and Asia. In late August 2022 natural gas price had recorded a historical peak, as the Netherlands-based TTF closed at around 90 USD/MMBtu and Asian spot LNG prices surged past 60 USD/MMBtu. Subsequent demand contraction, marginal supply growth, and infrastructure debottlenecking helped the market ease into a fragile, unstable equilibrium.
IGU President, Madam Li Yalan stressed:
The energy crisis reminded the world that only when energy is affordable and secure can it become truly sustainable. So many developing countries in Asia, Africa, and South America, will continue to need more gas to fuel the economy, to reduce air pollution and emissions. It is clear, to build sustainable and affordable energy systems for all, gas investments are urgently needed alongside more renewables.
LNG has been critical to navigate through the crisis, offsetting the shortage and keeping the lights on in Europe, yet global supply shortage and exceptionally high prices left some countries in Asia in the dark. In 2022, Europe’s LNG imports surged by 69% to reach 169 bcm, amidst a tightly supplied global market. To restore the global LNG security of supply, the current shortfall needs addressing. Despite recent optimism, the investment growth is occurring on the back of a prolonged low-investment period, and the total level and off-take agreements are still short to produce sufficient supply. In the period between 2014 and 2020, gas supply development investments dropped by 58%, and only started to marginally recover in 2021.
Analysis of future potential trajectories of global gas market fundamentals towards 2030 illustrates that continued investments in natural gas value chain are needed to cope with global demand and likely growth in some regions. International energy outlooks project a wide range of scenarios for the supply and demand of gas to 2030 and beyond. The most aggressive 1.5-degree decarbonisation scenarios project reduced global energy demand with high rates of technology and behavioural change and are subject to extremely high uncertainty, especially in the short to medium term. The current pipeline of natural gas and low carbon gases projects will not satisfy many of the possible demand outlooks. Without further investment, the current existing and approved gas production level is expected to reach roughly 4,100 Bcm in 2023, declining to 3,100 Bcm in 2030 and further to just under 1,000 Bcm in 2050, due to asset maturation and natural decline. At the end of 2022, the global supply capacity of low carbon hydrogen stood at 3.2 million tonnes per annum and biomethane stood close to 7 Bcm, which is orders of magnitude lower than most 2030 targets.
Total global energy CO2 emissions in 2022 reached another record with a 1.1% yearly growth. High gas prices led to gas-to-coal switching and an all-time high in emissions from coal, reaching about 16.8 giga-tonnes of CO2e. 2022 and 2023 continued the decade-long trend with coal having a 40% share of global power sector emissions, while the global economic engines and major energy consumers like China and India increased their coal usage and approved new coal plants to mitigate energy security risks. In the first half of 2023, lower gas prices, nuclear recovery, and power production from renewable energy sources have reduced coal consumption and emissions, especially in Europe.
For further information, please contact:
IGU Strategic Communications & Membership Director
Tel. +33 6 26 98 45 93
Snam Media Relations
Tel. +39 02.3703.9374
Davide Maria Sempio
Global Media Relations Director
Tel. +39 347.7709114
About the Report
The 2023 Edition of the Global Gas Report report is a collaborative effort by IGU and Snam, produced by Rystad Energy. It seeks to deliver global gas industry insights about the sector and to inform its stakeholders, partners, and global decision makers about the state of play today and highlight priorities for the future.
About the International Gas Union (IGU)
The IGU represents the global gas industry with more than 150 members in over 80 countries, covering over 90% of the global gas market across every segment of the gas value chain, from the supply of natural and decarbonised gas, renewable gas and hydrogen, through their transmission and distribution, and all the way to the point of use. The IGU organises the world’s leading international gas events, including the World Gas Conference (WGC), the International Gas Research Conference, and the World LNG conference series. www.igu.org
Snam is Europe’s leading natural gas transport operator with a network of about 38,000 km in Italy and abroad. The company also operates in storage and in regasification. With its 80 years of experience in the development and management of infrastructure, Snam guarantees security of supply and promotes energy transition.