Gas consumption in EU countries in August increased by 6.5% year-on-year

Industrial demand for gas in the EU countries picked up amid falling prices: in August, for the first time in ten months, an increase in gas consumption was recorded – by 6.5% year-on-year, to 17.5 billion cubic meters. So far this is happening only in certain countries, in Germany and Spain, and is mainly explained by the low base of last year, when consumers extremely reduced demand against the backdrop of peak gas prices. Nevertheless, analysts expect that the positive dynamics of consumption may continue in the coming months.

Gas consumption in the EU countries in August, after ten months of consistent decline, increased by 6.5% year-on-year, to 17.5 billion cubic meters, according to the monthly report of the Gas Exporting Countries Forum (GECF). However, from January to August, gas consumption in the EU decreased by 9.5% compared to the same period last year, reaching 214 billion cubic meters.

“It is worth noting that August 2022 was the month when prices reached an all-time high, leading to industry shutdowns across Europe, with 70% of European fertilizer production halted during this period,” the report said.

Last year’s energy crisis in Europe led to a reduction in fuel consumption after a drop in gas supplies from Russia. The European Commission recommended that countries reduce gas consumption by at least 15% amid a shortage of raw materials and high prices. In recent months, gas prices in the EU have stabilized, despite overall volatility, due to high reserves in underground gas storage facilities and warm weather. In September-November, according to APEC Climate Center forecasts, temperatures in most of the planet will be above normal.

The GECF explains the increase in demand in August by the decline in gas prices, which caused a revival in the industrial sector of a number of EU countries, primarily in Germany and Spain. Germany, the largest consumer of gas in the EU, has been reducing consumption over the past year and a half, but in August demand immediately increased by 8.8%, to 3.6 billion cubic meters. An increase in demand was observed in all sectors of the economy, most of all in the electric power industry – 24% year-on-year, as low prices led to an increase in the utilization of gas thermal power plants relative to coal ones. In the industrial sector, gas consumption increased by 8%, an increase recorded for the first time since November 2021.

In Spain, gas consumption decreased by 12% compared to the same period last year, to 2.3 billion cubic meters. Consumption in the electricity sector fell the most—by 32%—due to increased productivity of renewable energy sources. At the same time, in the industrial sector, demand for gas has been growing for the third month in a row. In August, it grew by 25% at once and was due to the oil refining (growth by 107%), textile (by 110%), agri-food (9%) and pharmaceutical (34%) industries.

One can see positive dynamics in gas demand in the EU in the coming months, mainly due to the low base effect of the second half of 2022: if in August 2022 demand decreased by 8.2% year-on-year, then in September – by 9.5 %, and in October – already by 23.3%, recalls Sergei Kondratiev from the Institute of Energy and Finance. “Therefore, demand growth rates in the coming months may be double-digit. But, of course, the dynamics will greatly depend on the temperature factor and the output of wind farms,” he believes. Despite the recovery in demand against the backdrop of low prices, the upward trend, in his opinion, remains fragile – gas consumption in industry in Italy and France is declining, while demand for gas in the power industry and from the population remains weak. The expert also draws attention to the fact that GECF statistics are based on ENTSOG data and the final estimates may be higher: for example, for Italy, Eurostat estimates gas consumption in August at 3.33 billion cubic meters (minus 12.6% year-on-year), GECF – at 3.2 billion cubic meters (minus 11% year on year).

Tatiana Dyatel