The IEA’s report highlights that natural gas prices, which soared to record levels during the 2022 energy crisis, have since moderated. This price stabilization is expected to bolster demand across various sectors, particularly in price-sensitive industrial segments. The industrial sector is anticipated to lead the recovery in gas demand, while the power generation sector will see more modest increases.
On the supply side, the IEA notes that gas availability remained tight throughout 2023. The increase in global liquefied natural gas (LNG) production did not meet expectations, primarily due to delays in new liquefaction projects and issues with feedgas availability at existing plants. This shortfall in LNG production has been compounded by the continued decline in Russian piped gas deliveries to Europe, putting additional strain on global supply chains.
The United States has emerged as a critical player in the global LNG market, accounting for 80% of the additional LNG supply in 2023. However, the growth rate of global LNG supply is expected to slow to 3.5% in 2024, significantly lower than the 8% annual growth rate observed between 2016 and 2020. This limited increase in supply is expected to constrain demand growth, especially in Europe and mature Asian markets, where the demand for gas is high but supply remains restricted.
Geopolitical uncertainties pose significant risks to the global gas market in 2024. The ongoing conflict in Ukraine, tensions in the Middle East, and potential disruptions to critical infrastructure like pipelines are key factors that could cause further volatility in gas prices and supply. The IEA emphasizes the need for strategic measures to ensure supply security and manage potential disruptions.
In response to these challenges, several major gas-importing regions have implemented new policies aimed at enhancing supply security and managing costs. The European Union has introduced a Joint Gas Purchasing mechanism to stabilize supply, while Japan has initiated a Strategic Buffer LNG plan in preparation for the winter season. China is also formulating a Natural Gas Utilization Policy to guide orderly growth in gas demand in the coming years.
The IEA’s report underscores the delicate balance between supply and demand in the global gas market and the importance of strategic planning and international cooperation to navigate the complexities of the current energy landscape. As the world moves towards greater energy security and sustainability, the dynamics of the gas market will continue to play a crucial role in shaping the global energy future.