This report presents our our latest view on the state of the European gas markets, and includes our updated outlook on natural gas prices to 2050, as well as detailed analysis of market and policy developments.
Key highlights of the report include:
- European gas consumption in 2020 is 6% lower than our May 2020 forecast as a result of the pandemic restrictions on economic activity. The COVID-19 crisis is expected to have a long-lasting impact on gas consumption driven by the weak economic outlook, resulting in 8% lower demand by 2050 compared to our previous outlook
- Gas prices are forecast to recover from current lows through the 2020s to €27/MWh by 2035 due to moderate growth in gas for power demand and rapid domestic production declines, exerting upwards pressure on gas prices. Gas prices grow at a slower rate from 2040 as high renewable penetration in power and fuel substitution in residential heating limits the growth of European gas demand
- Russian pipeline gas continues to increase at the expense of Europe’s indigenous production, but it grows at a slower rate due to weaker gas demand. Norwegian gas plays a key role in the gas balance of Northwest Europe, but export volumes decrease over time in response to declining gas demand and the increasing market share of Russian gas in Germany
- Despite the continued efforts to diversify supply sources, Southeast and Eastern Europe increase their reliance on Russian pipeline gas across the forecast as coal-to-gas switching in the power sector boosts gas consumption. Germany also increases its dependence on the Russian gas with the launch of NordStream 2, whilst the rest of Northwest Europe sees rising reliance on LNG as a result of a decrease in indigenous production
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