Gas Market Report, Q1-2024

INTERNATIONAL ENERGY AGENCY The IEA examines the full spectrum of energyissues including oil, gas and coal supply anddemand, renewable energy technologies,electricity markets, energy efficiency, access toenergy, demand side management and muchmore. Through its work, the IEA advocatespolicies that will enhance the reliability,affordability and sustainability of energy in its 31member countries,13association countries andbeyond. SpainSwedenSwitzerlandRepublic of TürkiyeUnited KingdomUnited States IEA member countries: AustraliaAustriaBelgiumCanadaCzech RepublicDenmarkEstoniaFinlandFranceGermanyGreeceHungaryIrelandItalyJapanKoreaLithuaniaLuxembourgMexicoNetherlandsNew ZealandNorwayPolandPortugalSlovak Republic The European Commissionalso participates in the workof the IEA This publication and any map included herein arewithout prejudice to the status of or sovereigntyover any territory, to the delimitation ofinternational frontiers and boundaries and to thename of any territory, city or area. IEA association countries: ArgentinaBrazilChinaEgyptIndiaIndonesiaKenyaMoroccoSenegalSingaporeSouth AfricaThailandUkraine Abstract Natural gas markets moved towards a gradual rebalancing in 2023,despite tighter supply fundamentals. Demand reductions in Europeand mature markets in Asia softened the impact of the gas supplyshock of 2022. Prices came down significantly in 2023, althoughthey remained well above their historical averages, both in Asia andEurope. in assessing and implementing flexibility options along gas and LNGvalue chains. This edition of the quarterlyGas Market Reportby the InternationalEnergy Agency (IEA) provides a thorough review of marketdevelopments in 2023 and a short-term outlook for 2024. It alsoincludes a special spotlight on greenhouse gas emissions along gassupply chains that examines emissions reduction initiativesundertaken by the largest natural gas and LNG producers andconsumers. As part of the IEA’s Low-Emissions Gases WorkProgramme, the report includes a section on policy and marketdevelopments related to biomethane, low-emissions hydrogen ande-methane. Natural gas markets are expected to see a return to strong growthin 2024, primarily driven by the industrial and power sectors in fast-growing economies in Asia and gas-rich countries in Africa and theMiddle East. An expected return to average winter weatherconditions, after an exceptionally mild 2023, is expected to supporthigher demand for space heating in the Northern Hemisphere.However, the continued expansion of renewables and improvingnuclear availability are likely to temper requirements for gas-firedpower generation in mature markets. High inventory levels together with an improving supply outlook areproviding gas markets with some reassurance for 2024. However,geopolitical tensions, rising shipping constraints, LNG project delaysand adverse weather conditions could renew market tensions andfuel price volatility. Security of supply for natural gas remains a keyaspect of energy policy making and the risks related to our outlookhighlight the need to strengthen international co-operation, including Table of contents Executive summary .....................................................................................3Key gas policies and market trends in 2023 .............................................7Gas market update.....................................................................................22Spotlight on GHG emissions along gas value chains............................50Low-emissions gases ................................................................................66Annex ..........................................................................................................78 Natural gas markets moved to rebalancing in 2023 and are expected to return to growth in 2024 Thesoftening of market conditions in 2023 was primarilydriven by the demand side. The rapid expansion ofrenewablesandimproving nuclear availabilityweighed on natural gasdemand in Europe and mature markets in Asia, driving prices lower.Mild winter weatherconditions together withgas-savingmeasuresalso reduced gas use in the residential and commercialsectors. As such,global gas demandgrew by an estimated 0.5%in 2023, which was not enough to make up the losses of 2022 whendemand dropped by 1.5%. Demand growth was primarily supportedby China, North America and the gas-rich markets in Africa and theMiddle East.China regained its position as the world’s largestLNG importerwith natural gas demand increasing by 7%. Incontrast,natural gas consumption in Europe fell by 7% to itslowest level since 1995. Following the gas supply shock of 2022,natural gas marketsmoved towards a gradual rebalancingin 2023 due to timelypolicy action, market forces and favourable weather conditions. Gasprices decreased significantly compared with their 2022 highs butremain well above their historical averages in Asia and Europe.Hubliquidity improvedacross all key ma