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Wood Mackenzie winter gas demand: Europe

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LNG Industry,


In its annual forecast of winter gas demand, looking at what to expect for 2014/15, Wood Mackenzie holds that the greatest uncontrollable risk to European gas markets is cold weather this winter.

Although there has been an increasing focus on the risk of a disruption to Russian gas supply transiting Ukraine this winter, the greatest risk to prices is a concurrent cold winter in Europe and Asia.

However, Wood Mackenzie holds that higher gas demand, resulting in higher gas prices in Northwest Europe, can be expected under normal weather conditions.

Gas demand in Northwest Europe is expected to be 16.5 billion m3 higher than last winter, due to a return to average temperatures and new reverse pipeline capacity transporting European gas to Ukraine.

Massimo Di-Odoardo, Principal Analyst for European Gas Research at Wood Mackenzie, said: "Meeting this projected rising demand will require higher than average withdrawals of gas from storage or an increased reliance on Russian gas.  As a result, gas spot prices in Europe at the back end of the winter will likely be higher than last year, subject to oil prices.” 

Gas storage

Although Northwest Europe currently has high storage inventories, a cold winter in both Asia and Europe could threaten supplies.

Mr Di-Odoardo elaborates: “Lower European LNG imports and insufficient storage inventories would force Europe into a greater reliance on Russian gas, but it will also highlight a lack of alternatives in some countries - in NW Europe, the UK and South France are most exposed.  With a relatively high reliance on LNG, limited storage capacity in the UK and limited pipeline connectivity from the south of France to the rest of Europe, this could result in daily price spikes and the need for demand management measures." 


Adapted from press release by

Read the article online at: https://www.lngindustry.com/liquid-natural-gas/30102014/wood-mackenzie-winter-gas-demand-europe-1694/


 

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