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Energy agency advises EU to save gas, warns of tight market into 2023

The International Energy Agency (IEA) is advising the EU to make savings in gas consumption to avoid empty storage facilities and the risk of supply disruptions this winter.

The International Energy Agency (IEA) is advising the EU to make savings in gas consumption to avoid empty storage facilities and the risk of supply disruptions this winter.

To keep gas stocks at an adequate level until the end of the heating season, demand must be reduced by 9 to 13% compared to the average of the past five years, the IEA’s gas market report presented in Paris on Monday said.

With a low inflow of liquefied natural gas (LNG), this would ensure that gas storage remains filled at a level of 25 to 30%, it said.

Without reduced gas consumption and in the event of a complete Russian supply freeze from November, storage levels could drop to just under 5% if at the same time only little LNG is delivered to the EU. This would increase the risk of supply disruptions in the event of a late cold snap.

With a high inflow of LNG, storage would remain less than 20% full, according to the IEA analysis.

“Russia’s invasion of Ukraine and sharp reductions in natural gas supplies to Europe are causing significant harm to consumers, businesses and entire economies – not just in Europe but also in emerging and developing economies,” said IEA director for energy markets and security Keisuke Sadamori.

“The outlook for gas markets remains clouded, not least because of Russia’s reckless and unpredictable conduct, which has shattered its reputation as a reliable supplier. But all the signs point to markets remaining very tight well into 2023.”

Global natural gas consumption is expected to decline by 0.8% in 2022, with a record 10% drop in Europe and unchanged demand in Asia-Pacific.

Next year, global gas consumption is expected to increase by 0.4%, but the outlook is subject to a high degree of uncertainty, particularly regarding Russia’s future actions and the economic impact of persistently high energy prices, the IEA said.

The current gas crisis is also creating longer-term uncertainty, according to the IEA, especially in developing countries where natural gas consumption was expected to increase at least in the medium term as a substitute for coal.

In addition, international trade in LNG is coming under heavy pressure in the short to medium term due to the sharp increase in European imports.

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