© Mike Mareen / Adobe Stock
The Gas Exporting Countries Forum (GECF) has released its June GECF Monthly Gas Market Report highlighting that growth for May was primarily driven by robust LNG demand in Europe and Latin America and the Caribbean, which offset weaker imports in the Asia Pacific and MENA regions.
Global LNG imports experienced a 3.5% y-o-y growth, reaching 34.4 Mt. Despite favourable spot LNG prices in the Asia Pacific, there was a continued flow of LNG towards Europe which can be attributed to the declining pipeline gas imports. The doubling of LNG imports in Argentina compared to last year was also the result of continued decline in pipeline gas imports from Bolivia. Adding to global trade, Hong Kong became an LNG importer in May.
In May 2023, the EU experienced a 6% y-o-y drop in gas consumption, reaching 20 bcm, but China saw a 3.5% y-o-y increase, reaching 129 bcm of apparent gas consumption from January to April. US gas consumption rose by 1% y-o-y in May, with significant 5% growth in the power generation sector equivalent to 1.3 bcm.
Declining gas production in the Netherlands and UK meant that Europe experienced a 3.2% y-o-y drop in gas production, reaching an output level of 15.6 bcm. In contrast, there was a 5% y-o-y increase in gas production in the seven major US shale oil and gas regions, culminating in an output of 85.1 bcm.
Gas and LNG spot prices in Europe and Asia reached their lowest levels in two years, primarily due to ongoing weak gas demand and ample EU storage levels. The average spot prices for TTF and NEA LNG stood at $10/MMBtu, marking declines of 27% and 17%, respectively, compared to the previous month.
The relatively low gas spot prices are expected to encourage coal-to-gas switching in Europe, and this could lead to price increases. Emerging buying interest from price-sensitive LNG importers in South and Southeast Asia may also contribute to price rises.