Global Gas Demand Will Slow Amid Energy Crises: IEA

Demand for natural gas is expected to slow down this year as surging prices in Europe and Asia divert consumption to cheaper coal, the International Energy Agency (IEA) said on Monday.

European demand will plunge 4.5 percent this year, following a 5.5 percent gain last year, the IEA said in its quarterly gas market report.

“Gas-fired power generation is expected to decline amid the strong expansion of renewables, while high gas prices continue to weigh on its competitiveness vis-a-vis coal-fired generation,” the report read.

Gas prices in Europe and Asia soared to record highs last year due to high demand coinciding with low supply levels and infrastructure outages. Prices of coal also spiked, but relatively lower than gas prices, making coal more favorable for power generation.

Increasing tensions between Ukraine and Russia also threaten thinning pipeline supplies from Russia to the EU. An invasion by Moscow to Kyiv would translate to large supply disruptions.

Higher import prices is set to slow Asian demand for natural gas by 5 percent this year despite a 7 percent growth last year, the IEA said.

This year, European gas prices are expected to average $26 per metric million British thermal units (mmBtu) and Asian prices at $27/mmBtu, both record highs, due to the persisting supply issues.

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