2022 marked the worst natural gas and energy crisis in history due to the Russian invasion of Ukraine. The war in Ukraine has strongly impacted the global natural gas market because of the predominant role of Russian gas in European energy supply. Russian pipeline gas exports to Europe slumped to the lowest level observed since the mid-1980s, resulting in a loss of 77 bcm, equivalent to 20% of EU gas consumption in 2021, which had to be replaced. The global gas market was already tight in 2021 and the Russian gas supply crisis has thus further exacerbated the tightening and the volatility of gas markets. Prices of all commodities and energies spiked and the European gas prices in particular showed an exceptional volatility. Countries responded to energy security issues and high gas prices with gas-to-coal switching (Germany, Asia), energy savings and an acceleration of the development of clean energy technologies. Furthermore, the slower economic growth and the explosion in gas prices led to a destruction of industrial gas demand.
Laïla LOSSON - Page 4
GLOBAL BIOMETHANE MARKET 2023 ASSESSMENT – From ambition to action
According to CEDIGAZ’s Annual Report on Global Biomethane, the global biomethane or renewable natural gas (RNG) industry grew by 23% in 2022, with production increasing from 6 billion cubic meters (bcm) in 2021 to 7.4 bcm in 2022. The market is expected to expand significantly over the coming decade and beyond, and it has the potential to surpass 100 bcm by 2030 if appropriate policies and regulations are implemented.
Quarterly report – Q1 2023 – International natural gas prices
In the first quarter of 2023, European and Asian spot prices continued the downward trend observed since the summer of 2022, despite the fall in Russian pipeline gas deliveries. European gas prices have reached their lowest level since the summer of 2021 but remain two to three times higher than the historical average. These relatively calm market conditions are due to several factors: a milder than normal winter which has reduced gas consumption for space heating, continued strong LNG imports into Europe and lower gas consumption in all sectors. These developments have kept European storages at record levels, which is a bearish factor on forward prices.
Evolution of international gas prices in the first quarter of 2023
In the first quarter of this year, the EU TTF price was 42% lower than in the previous quarter, at $16.8/MBtu (€54/MWh), returning to a level similar to that in the third quarter of 2021. The TTF bottomed out at $12.6/MBtu (€40/MWh) on the 20 March, its lowest level since the summer of 2021. European market fundamentals are bearish. It is estimated that in the first quarter of this year, EU gas consumption was 17% below the seasonal average. Against this background, continued strong imports of LNG and Norwegian gas have allowed to both replace Russian pipeline gas and ensure a very high level of gas storages.