OIES Podcast – Outlook for Global Gas Markets and Chinese Gas Demand

In this latest OIES podcast, brought to you by the Gas Research Programme, James Henderson talks to Jack Sharples and Mike Fulwood about the outlook for the global gas market before having a more focused discussion with Michal Meidan about the prospects for Chinese gas demand in 2023. Jack and Mike review the key signposts that highlighted at the start of 2023 and which we continue to monitor the implications of the Russian invasion of Ukraine. These are the level of Russian gas supply into Europe, which has fallen sharply over the past 12 months and continues to be at risk in Europe; the development of global LNG supply both as a replacement in Europe but also to supply other importing regions; the pace of demand in growth in Asia, as the major consumer of LNG in the world; total gas supply into the European market as a proxy for demand; the level of storage in Europe as a measurement of preparedness for increased gas demand in winter; and the level of prices that emerge from theses supply and demand issues. As we review the first quarter of 2023 against these signposts the overarching theme is that the outturn for Europe has been much more benign than could have been expected at the start of winter. However, although prices have fallen sharply from their 2022 highs, they still remain well above the 5-year average level, underlining the point that although the outlook for 2023 looks relatively calm it would not take much of a shift in supply or demand to cause a sharp rebound.

On China, one of the big questions has been how the unwinding of the COVID lockdown would impact energy markets. With the economy now fully re-opened, it is expected that growth will resume and with it energy demand, including demand for pipeline gas and LNG imports. Michal Meidan describes the underlying complexities of the future of gas in China in the short and long-term. Much depends on what route to growth the Chinese leadership decides to take, and also on the policy concerning energy security, which tends to favour gas over coal. In addition, the drive to increase domestic gas production and to optimise imports via pipeline means that the need for spot LNG purchases could be minimal in 2023, albeit that LNG supply under long-term contracts is set to grow.