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EU countries cut gas demand by a quarter in November even as temperatures fell, the latest evidence that the bloc is managing to reduce its reliance on Russian energy since Moscow’s invasion of Ukraine.
Provisional data from commodities analytics firm ICIS showed EU gas demand was 24 percent below its five-year average last month, following a similar drop in October.
European countries are trying to reduce their reliance on Russian gas and oil by finding alternative sources or making changes to curb demand. They were helped by an unseasonably warm fall, although temperatures have dipped closer to normal in the past two weeks.
In Germany and Italy, the two countries that use the most gas in the EU, demand fell by 23 and 21 percent, respectively, in November, ICIS found. In France and Spain it decreased by more than a fifth, and in the Netherlands by slightly more than a third.
“Industry is proportionally driving the largest reduction in gas consumption, and this is entirely the result of clear market prices,” said Tom Marzec-Manser, lead European gas analyst at ICIS. The high price of gas has “disincentivized” usage, he added.
Europe has also imposed strict new restrictions on Russian oil exports to limit the use of that energy source as well.
The EU ban on imports of Russian oil at sea came into force on Monday. Meanwhile, G7 leaders agreed to launch a so-called price cap aimed at keeping Russian oil flowing to countries like India and China to avoid major shortages, but only if oil is sold below $60 a barrel to Moscow’s income decreased. .
However, industry executives and analysts warn that without further declines in demand and more LNG imports, gas shortages could continue for years in Europe.
“Demand will have to be lower than before.” [Russia-Ukraine] war levels to get enough supplies” for next winter, said Alex Tackett, head of economics at consultancy CRU Group. “The question is how much the demand will decrease and how painful it will be.”
Falling demand meant EU gas storage facilities were at 95 percent capacity in mid-November, according to industry body Gas Infrastructure Europe, close to a record high. Record LNG inflows into the region have also helped.
But cooler weather in recent weeks has boosted demand and storage capacity is now around 93 percent.
At the same time, prices have risen. Dutch TTF gas futures, the benchmark European contract, are trading near €150 per megawatt hour, the highest in more than a month, but still only half the €300/MWh they briefly touched in August.
Higher gas prices are a burden on households and businesses, but have allowed Europe to attract record volumes of LNG because of the premium it pays over other buyers.
ICIS data shows that Europe and the UK imported 11.14 million tonnes of LNG in November, a record monthly high, and are on track to receive 12.2 million tonnes in December.
Marzec-Manser added that he is cautious about the planned cap on gas prices in Europe.
“Any move to cap wholesale gas prices could threaten Europe’s ability to provide.” [LNG] supply, not only this winter, but for next winter and beyond,” he said. “If Europe would [is] rather than a peak global gas market, it would lead to a reduction in imported cargoes at a time when they are most needed.”
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