European natural gas demand continues to decline

Friday, February 28, 2014

Natural gas consumption in Europe has been declining since 2011, due to the 2007 financial crisis and unconventional gas supplies in North America, reports released by the International Energy Agency say.

Natural gas consumption in Europe has been declining since 2011, due to the 2007 financial crisis and unconventional gas supplies in North America, reports released by the International Energy Agency say.

By Emre Gurkan Abay

ANKARA - Reports show that natural gas consumption in Europe has been declining since 2011, due to a number of factors including the 2007 financial recession and the increasing consumption in favorably priced North American coal.

According to reports released by the International Energy Agency (IEA), annual natural gas consumption in 2011 in Europe was 8% lower than in 2010, while consumption of coal was 6% greater.

Reduced economic activity due to the financial crisis in 2007 dampened the overall electricity demand in Europe, especially in the industrial sectors. Total European demand is around 547 billion cubic meters of natural gas a year.

Different reports by the European Commission also indicate that the production of natural gas in the European region is in decline, as production was 5% lower in 2012 than 2011. Production in the United Kingdom dropped to 30 billion cubic meters in 2012, to less than half the level of production in 2005.

Liquefied Natural Gas (LNG) imports in Europe continued to fall as well. The decrease fell by almost 50% in the first four months of 2013, compared to the same period in 2011.

IEA also predicts that LNG imports in Europe will continue to decline in the upcoming years, as Europe’s rapidly growing renewable energy sector has replaced a large share of gas for power generation.

Another reason for the decline in natural gas consumption in Europe is new technology, enabling unconventional gas supplies to be exploited in North America -- altering natural gas production and trade globally.

The increasing use of unconventional gas in North America lowered the use of coal causing coal suppliers in North America to look for new markets, primarily in Europe. Accordingly, with the boost in coal supply and consequently the cutback in coal prices from higher competition, natural gas started to lose its share in global power generation.

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