Navigating the
new gas market

Fuel costs may have stabilised at lower levels year on year, but the gas market remains a difficult place to navigate following Russia’s invasion of Ukraine in 2022.

The unprecedented fundamental shock of last year has structurally changed the global gas market with some effects likely to linger for years.

Adapting to supply disruptions

One notable response to last year’s developments was the increase in LNG regasification capacity and long-term contracting activities. However, these interventions have proven insufficient to fully address the uncontracted gap left in the wake of the crisis. The lingering uncertainty surrounding the development of the European gas market underscores the need for strategic planning and collaboration among stakeholders.

Resilience through market flexibility

There has also been a significant shift towards spot procurements in the EU, the non-observance of Russian piped gas contracts increased the European Union’s reliance on spot procurements, which rose from just 20% of total gas supply in 2021 to over 50% in 2023.

Striking a balance between long-term contracts from non-Russian suppliers and participation in the liquid spot market remains a challenge as Europe seeks to ensure a stable and diverse gas supply.

Energy efficiency and evolving demand

The crisis has weakened Europe's industrial gas demand amid unsustainably high prices and supply vulnerabilities.

This reduction has been achieved through a combination of energy efficiency measures and decreased production.

With projected fuel costs remaining above the long-term average, most buyers foresee further reduction in gas usage over the next few years, with expectations ranging from moderate declines to more substantial cuts.

Challenges in demand recovery

The effects of wholesale power price changes on consumer behaviour have been mitigated by various factors including policy interventions and hedging requirements.

While there might be a price-induced uptick in demand in the coming months, evidence of sustained industrial efficiency gains suggests a more permanent reshaping of demand.

Despite falling prices, persistently below-average gas demand indicates that a return to pre-2022 levels during the latter half of the year is unlikely.

Building partnerships for the future

Opportunities remain for gas and LNG suppliers to collaborate with buyers despite challenging market conditions.

Developing cross-energy offerings and long-term partnerships could play a pivotal role in the industry's transition towards more sustainable energy sources.

A strategic approach that spans 5-10 years can facilitate a proactive response to evolving market dynamics, thus ensuring a smoother transition towards a more resilient and sustainable energy future. Gaining a strategic advantage is therefore crucial for market players.

The role of ICIS

ICIS Gas Foresight is empowering market players with the insight to gain this advantage with an integrated platform that revolutionizes the way professionals navigate the gas market in Europe.

ICIS Gas Foresight offers an indispensable tool for those seeking to master the intricacies of the gas market. It provides a comprehensive, 360-degree view of the gas market, allowing users to understand market dynamics, trends, and interdependencies that impact prices and supply.

In an era where gas price forecasting has become increasingly complex, ICIS Gas Foresight stands out by capturing the multifaceted relationships between various factors affecting the gas market. This holistic approach enables market participants to make informed decisions that minimize costs and maximize profits.

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