Gas market
Forecast
The global natural gas market faces new challenges and opportunities in 2024. The latest published Gas Market Report from the International Energy Agency (IEA) forecasts an increase in gas demand due to the expected frosty winter and lower trading prices, while supply remains at the same level as last year. The report also emphasizes that the market is affected by geopolitical instability and other factors that should be taken into account. The IEA is an organization with expertise and credibility, so we believe it is important to share its findings.
The report briefly reviews the results of the previous year, which will definitely influence the market in the following periods. Therefore, it is logical to consider them first. In 2023, international gas demand grew by only 0.5%. Growth in China was offset by declining consumption trends in Europe. China has returned to its position as the No. 1 importer before the pandemic. On the other hand, Europe has seen a significant increase in nuclear power capacity and political measures to reduce purchases of Russian gas and oil. As a result, the drop in demand in the European market reached 7%, a record since 1995. The whole world felt the consequences - this caused prices to fall, which is definitely a plus for the end consumer. However, there are also many disadvantages of constant price fluctuations, but we will not dwell on them in detail in this article.
In 2024, global gas demand is expected to grow by 2.5%, mainly due to the expected cold winter. In numbers, this is an increase of about 100 billion cubic meters. Another reason is prices. Additionally, it should be noted that the market value, while higher than the historical average, still shows a tendency to fall sharply compared to 2022.
It is worth noting that the rise in gas prices will offset the decline in oil prices on global markets and the negative consequences for Ghana's budget, as we wrote in our article "Ghana's fuel market in 2024".
Suppliers increased gas production, but the level was lower than consumers' expectations. The additional volumes could not compensate for the deficit caused by sanctions on Russian pipeline gas. In terms of geography, the largest increase in gas production was in the United States, which provided 80% of the additional volumes.
A gas shortage caused by limited production and high demand can "swing" prices. Europe will feel this most of all. This is important to consider when planning supply strategies and investments in gas infrastructure. Companies should be prepared for possible changes in the market situation and respond to them according to the circumstances to ensure the stability and efficiency of their business in the face of uncertainty.
In 2024, the gas market will be affected by several key factors. First, availability constraints, as increased gas production will not be able to fully compensate for the decline in supplies, especially from Russia. In this context, it is worth noting the growing attention to previously less visible market players. For example, Idol Energy. Who are we? We are a Ghanaian oil and gas products supplier that can offer a financially viable alternative to the world's largest companies and traditional energy sources. In particular, our product portfolio includes liquefied petroleum gas. In 2024, we recommend paying closer attention to LPG. We will talk about this in more detail later.
Second, geopolitical factors. Currently, they introduce uncertainty and complicate gas production and logistics. The IEA's report emphasizes several events: the Ukrainian-Russian armed conflict and tensions in the Middle East. Each of the situations does not allow making accurate predictions about the end of the active conflict phase.
Third, a gradual recovery from the energy crisis, which will require a balanced approach to supply and energy security. The recovery of industrial production after the Covid-19 pandemic in China has demonstrated how quickly energy demand can return to pre-crisis levels. Similar trends may be observed in the recovery from the energy crisis.
The 2024 liquefied natural gas (LNG) market outlook reflects important trends and factors affecting this segment of the energy market. According to the Shell LNG Outlook 2024 report, global demand for LNG is expected to grow significantly through 2040, but this growth may be limited in 2024 due to a number of factors.
One of the key factors that will determine the LNG market in 2024 is the limited growth of LNG production. LNG supply is projected to grow by 3.5% in 2024, which is higher than production growth in previous years but below the average annual rate in 2016-2020.
Another important factor is the geographical distribution of LNG demand. China is expected to be the main driver of LNG demand growth in 2024 as the country tries to reduce carbon emissions by switching from coal to gas in its industry. Economic development in South Asia and Southeast Asia is also expected to increase LNG demand in these regions in the next decade.
In the context of the European market, energy security is an important factor. LNG will continue to play an important role in ensuring energy security in Europe, especially after the change in circumstances with Russian gas exports through pipelines. Balanced supply and preservation of gas reserves help to stabilize prices.
Overall, the LNG market outlook for 2024 indicates potential growth in LNG demand, but it is constrained by factors such as delays in the construction of new plants and geopolitical turbulence. It is important for companies and governments to take these factors into account in their energy sector development strategies, including when planning investments in gas infrastructure.
In 2024, the issue of reducing greenhouse gas emissions is so acute that countries are actively taking measures to reduce their negative impact on the environment. But let's be honest - it is impossible to give up oil, gas and hydrocarbons. We need to find a balance between energy security and environmental protection.
Much attention is focused on the development and support of low-emission energy sources. Experts from the International Energy Agency (IEA) note that governments around the world are taking a wide range of policy measures to stimulate the development of these clean energy sources and support sustainable environmental development. This trend is aimed at reducing the negative impact on climate change, which is becoming increasingly important in the modern world.
All of this indicates that the global market will be "stormy" in 2024, and this should be taken into account. All major players must closely monitor trends and make informed decisions to ensure sustainable energy development. In 2024, we can expect an increase in demand for natural gas and LNG, but the dynamics will not reach the record or even average levels of 2016-2019. The main drivers of growth are the return of industrial production to its previous level in China and the economic recovery in South Asia and Southeast Asia. However, limited growth in LNG production and geopolitical turbulence may adjust this development. All in all, the gas market will remain tense, and companies and governments should be prepared to manage risks and seek new opportunities in this dynamic energy environment.
