Global gas demand on course to hit new high next year

Global demand for natural gas is on course to reach a record next year, driven by Asia and tight supply.
In a recovery from the energy crisis, gas consumption has grown 2.8 per cent during the first three quarters of this year and is forecast to rise by more than 2.5 per cent for the full year, according to the International Energy Agency (IEA).
Demand will rise by 2.3 per cent next year to a new record, the agency predicted in its latest annual global gas security review, and Asia is expected to account for more than half the increase.
The agency expects global gas demand to peak before the end of the decade, before declining in line with the Paris Agreement to achieve net-zero emissions by 2050.
Gas supply has also been weaker this year, rising only 2 per cent, compared with an average rate of 8 per cent between 2016 and 2020.
Shipping constraints emerged earlier in the year in the Panama Canal and as a result of the Houthi rebel attacks in the Red Sea and although this did not lead to a decline in liquefied natural gas (LNG) supply, the IEA said, it had underscored the potential vulnerabilities of LNG trade.
Supply growth will accelerate, however, to 6 per cent next year, the agency predicts, as several LNG projects come on line. North America is expected to account for about 85 per cent of the extra production.
Keisuke Sadamori, the IEA’s director of energy markets and security, said that the growth in demand reflected a recovery from the energy crisis. “But the balance between demand and supply trends is fragile, with clear risks of future volatility,” he said. “Producers and consumers must work together closely to navigate these uncertain times while taking into account the need to advance clean energy transitions to ensure a secure and sustainable future.”
Despite the volatility in European gas prices easing from the highs in the immediate aftermath of the invasion of Ukraine in 2022, they remain above historic averages at about 50 per cent in terms of price variations, compared with a typical rate of 34 per cent between 2010 and 2021.
Heightened volatility in wholesale gas prices was one of the reasons for the increase in energy bills for the typical household in Britain from the start of this month, after Ofgem lifted the price cap by 10 per cent, or £12 a month, for the first time since last January.
Britain has become more reliant on imports of American LNG since the Russian invasion of Ukraine, which also has contributed to wholesale gas prices becoming more variable.