Europe | Natural Gas. December 2022

The European Union is on track to close 2022 with consumption below previous years and healthy reserves. However, a possible return to normal temperatures, China's economic recovery and, concerns about Russia supply and nuclear generation in France could put pressure on the gas markets in 2023

Key points

• Key points:
• Europe's gas consumption in 2022 remains below that of the previous three years (-9% YTD)
• International Energy Agency estimated 57 bcm supply-demand gap in 2023, assuming temperatures back to normal and no pipeline supply from Russia
• Our November’s baseline estimates for the year ahead assume some supply from Russia through pipelines, but are more conservative on nuclear supply in France. We expect no gas shortages this winter but have more doubts for the winter of 2023-24.
• We estimate a rebound in 2023 of total China's gas demand to levels above 2021 but expect China’s LNG imports will increased moderately to below 2021 levels. The risk scenario is that LNG imports could return to 2021 level, taking most of the expected increase in LNG liquefaction capacity in 2023
• European prices keep falling on milder weather, healthy storage and supply and, the EU price cap agreement

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