Global gas demand in Q1-Q3 2024 grew by more than its historical average growth rate
Natural gas demand returned to more pronounced growth in 2024 as markets gradually rebalanced following the 2022-23 gas supply shock triggered by Russia’s invasion of Ukraine. Around half of this demand growth was concentrated in Q1. Limited LNG supply growth and geopolitical tensions provided upward pressure on gas prices across key import markets in Q2-Q3, which in turn weighed on gas demand growth rates. Improving hydro availability in China and South America further limited gas-to-power demand growth.

Industry emerges as the primary driver behind incremental gas demand in 2024

Asia has returned to strong gas demand growth in 2024
Asian gas demand expanded by near 7% y-o-y in Q1-Q3 2024, driven mainly by China and, to a lesser extent, India. This notable growth was supported by weather events, including widespread heatwaves across Asia in Q2, and relatively low LNG prices in H1 2024 Preliminary data indicate a modest deceleration in Asian gas demand growth in Q3 due to recovering spot LNG prices, increasing nuclear and hydro availability, and slowing industrial activity in China, which could present headwinds for gas use in the second half of the year. In 2024 Asian gas consumption is set to increase by more than 5%, with 70% of the growth coming from China alone, and industry accounting for 40% of the increase. In 2025 Asia’s total consumption is projected to increase by another 5% on the back of growing LNG supply in the global market.

India’s gas consumption reached its highest level on record in Q2, led by oil refining and industry

Europe significantly reduced its call on LNG in Q1-Q3 2024…
OECD Europe’s primary natural gas supply fell by an estimated 6% (or almost 20 bcm) y-o-y in Q1-Q3 2024. Lower gas demand together with high storage levels reduced the call on LNG imports, while the region’s domestic production continued to decline. Europe’s LNG imports declined by nearly 20% (or around 25 bcm) y-o-y in Q1-Q3 2024. The continued decline in natural gas demand, together with lower storage injection needs and stronger piped gas deliveries, kept European hub prices below Asian spot LNG prices in Q1-Q3 2024. This in turn incentivised flexible LNG cargoes to flow towards Asia instead of Europe. Nevertheless, LNG retained its position as Europe’s dominant source of primary gas supply, its share declining from 38% in Q1-Q3 2023 to 32% during the same period of 2024. LNG flows from the United States fell by 18% (or more than 10 bcm) y-o-y. Still, the United States kept its position as Europe’s largest LNG supplier to account for over 45% of Europe’s LNG imports in Q1-Q3 2024. LNG flows from Qatar declined by 33% (or 5 bcm) y-o-y, as flows were redirected towards the more lucrative Asian markets. Security issues along the Red Sea further weighed on Qatari LNG flows towards Europe. In contrast, Russian LNG inflows rose by 16% (or 2 bcm) y-o-y, solidifying Russia’s position as Europe’s second-largest LNG supplier. Russian LNG deliveries remain highly concentrated: Belgium, France and Spain accounted for 85% of Europe’s total LNG imports from Russia in H1 2024.

…with the region’s LNG inflows dropping by 20% compared with last year

Q3 storage injections sufficient to set Europe and United States in a robust position for winter
Natural gas inventories in key markets ended Q3 well above historical average levels. While injections remained noticeably lower than average throughout the entire filling season, record stocks at the end of the previous winter helped keep storage levels on a par with or ahead of last year’s curve over the period. Overall, natural gas storage levels are in a robust position ahead of winter 2024/25. In the European Union storage levels reached the EU-imposed 90% fill target in mid-August, well ahead of the 1 November cutoff date and in line with last year’s trajectory. Throughout much of 2023, EU gas storage had already trended at the top of the historical range, ending the filling season at record highs and subsequently closing the 2023/24 winter season at a new record high as well. As such, 2024 storage trends have had relatively limited space to establish new records. The 6 bcm (10%) surplus above 2023 fill levels that existed mid-April had broadly disappeared by mid-summer, and storage fill closed September at a 1 bcm (1%) deficit to 2023 levels as injections remained about 24% below the five-year average rate over the Q2-Q3 period. Still, EU storage levels were 94% full by 1 October, about 6.5 bcm (7%) higher than the five-year average.

Despite slower summer injections y-o-y, storage levels on par with 2023 highs ahead of winter

Update on LNG contracting trends This section provides an overview of the most recent LNG contracting trends, analysing LNG supply availability and the evolution of destination flexibility in LNG contracts. The analysis is based on the contractual positions of exporters and importers and their actual traded volumes, using the IEA internal LNG contract database. Unless otherwise stated, only firm supply contracts are taken into account. These include LNG sale and purchase agreements (SPAs), equity entitlements and tolling agreements linked to an LNG supply project that is either operational, under construction or has reached a final investment decision (FID).

The global LNG market continues to gain liquidity and pricing diversity

The Middle East and North America led new LNG contracts on the export side in 2023 The contract volumes concluded with post-FID projects in 2023 totalled 54 bcm/yr, representing a 24% decrease compared with 2022, when they totalled 71 bcm/yr. Including contracts with pre-FID projects, the contracted volumes in 2023 stood at 83 bcm/yr, exceeding the volume concluded in 2021 (79 bcm/yr), but 18% lower than the volume signed in 2022 (100 bcm/yr). Combined volumes from North America and the Middle East accounted for over 70% of the contracted volumes signed in 2023, showing a trend similar to 2022. On the export side, the Middle East alone accounted for 55% (or 30 bcm/yr) of the volumes contracted with post-FID projects in 2023 In 2021 and 2022 North America accounted for the largest share of post-FID LNG export contracts, but in 2023 the Middle East surpassed North America as the largest source of supply. Qatar accounted for more than 40% (or 23 bcm/yr) of concluded volumes in 2023 and was the largest source by country, supported by the North Field East and North Field South expansion projects. North America was the second-largest source of supply in 2023, accounting for 23% (or 12 bcm/yr) of the contracted volumes signed with post-FID projects in 2023, continuing to contribute to the growth of new LNG contract volumes as a source of exports. Portfolio players and the Asia Pacific region accounted for 11% (or 6 bcm/yr) and 3% (or 1.5 bcm/yr) respectively of the total contracted volumes signed in 2023.

Source:https://www.iea.org/reports/global-gas-security-review-2024