IEA: High Prices, Supply Fears Dampen Gas Demand

The International Energy Agency (IEA) says high prices for natural gas and supply fears due to the war in Ukraine will slow the growth in demand for fossil fuel in the coming years, the Associated Press (AP) reported.

Photo Insert: Headquarters of the International Energy Agency (IEA)

The Paris-based organization predicted that worldwide consumption for natural gas will climb by 140 billion cubic meters (bcm) between 2021 and 2025 in research released on Tuesday.

This is less than half of the 370 bcm growth witnessed in the preceding five-year period, which included the pandemic decline. The lowered prediction is primarily due to slower economic growth expectations rather than buyers shifting from gas to coal, oil, or renewable energy.

“Russia’s unprovoked war in Ukraine is seriously disrupting gas markets that were already showing signs of tightness,” said Keisuke Sadamori, the agency’s director of energy markets and security.

Efforts by European Union (EU) countries to wean themselves off Russian gas will result in a reduction of 55 percent to 75 percent in pipeline shipments from Russia to the 27-nation bloc, according to the IEA.

Simultaneously, the EU's purchases of liquefied natural gas have diverted supplies intended for other countries, such as Asia, which is expected to account for half of the demand increase by 2025.

“We are now seeing inevitable price spikes as countries around the world compete for LNG shipments, but the most sustainable response to today’s global energy crisis is stronger efforts and policies to use energy more efficiently and to accelerate clean energy transitions,” added Sadamori.

According to the agency's quarterly report, capacity is hampered in part by a drop in gas infrastructure investments in the mid-2010s and pandemic-related building delays. According to the report, recent additional investments are unlikely to have an impact on gas supplies until around 2025.

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