IEA: EU natural gas price outlook looks positive

The expected significant increase in global LNG supply is set to create a more stable and cheaper environment for European consumers in the coming years. According to the International Energy Agency (IEA), up to 300 billion cubic metres of new export capacity will come onto the market, primarily from the United States, Qatar and Canada. According to IEA Executive Director Fatih Birol, the EU can use this to boost its competitiveness against other regions. Birol said this in an interview with energy news portal Montel.

According to Birol, gas prices on the European market will face significant downward pressure from their current levels in the coming years. The reason is the expected influx of large volumes of liquefied natural gas (LNG), which will gradually enter the market. According to the agency and its director, the commissioning of new LNG export terminals is set to fundamentally alter the balance between supply and demand.

LNG supplies to Europe from the US and Qatar amounted to 47 bn m³ per year in 2021, before Russia's aggression against Ukraine, reached 70.5 bn m³ last year and, based on Kpler data cited by Montel, 73 bn m³ this year. Over the same period, from 2021 to 2024, annual natural gas supplies from Russia to the EU fell from 150.2 bn m³ to 51 bn m³.

To put this in perspective, total EU demand for natural gas may stand at around 300 bn m³. Historically, however, it was higher and can be expected to rise again, given the shift in electricity generation from coal to gas or a decline and stabilisation in gas prices, which would stimulate consumption.

Thanks to LNG, however, the EU is able to successfully fill its gas storage facilities ahead of the coming winter season. As of 9 September, they are approaching 80% full.

According to Birol, market developments point to more favourable times ahead for Europe, especially after several crisis years marked by supply disruptions, instability and significant price volatility.