IGU report shows cooling global gas prices
Natural gas prices in most markets around the world cooled somewhat in 2023, coming off spikes in 2022 caused by Russia’s invasion of Ukraine and subsequent efforts to shun imports of Russian gas, the International Gas Union (IGU) says in its flagship Wholesale Gas Price Survey report, released April 23 at the Flame Conference in Amsterdam.
The average world natural gas price fell to $5.70/mn Btu in 2023 from $9.48/mn Btu in 2022, but the 2023 average was still the second highest average since the IGU introduced its report in 2005.
The highest prices were still found in Europe, as an on-going reliance on LNG imports to replace Russian piped gas yielded an average price of $15.83/mn Btu. Prices in the Asia Pacific region averaged $11.56/mn Btu, down from just under $15/mn Btu in 2022, while prices in Asian markets averaged $9.16/mn Btu, down from about $10/mn Btu in 2022.
Gas priced via gas-on-gas (GOG) competition models continued to escalate in 2023, the IGU report shows, with the total volume of global GIG imports rising to an all-time high of 57%, with gas linked to oil prices (the Oil Price Escalation, or OPE, model) settling at 36% and the remaining 7% priced through direct bilateral agreements (BIM) between large buyers and sellers.
The share of GOG consumption, meanwhile, slipped to 49.7% from a little over 50% in 2022, as India switched to OPE from GOG and demand fell in Europe. Elsewhere, large swathes of gas markets – the Former Soviet Union, the Middle East and Africa – remained largely regulated.
Further highlighting the maturation of the global gas market, the share of spot LNG in global trade rose 3% year-on-year, to 38%, with demand rebound in China and further spot LNG growth in Europe as customers turned away from Russian piped gas contributing to the rise, the IGU report said.
“The maturing and growing flexibility of a truly global gas market are welcome signs from this year’s survey results,” IGU President Madam Li Yalan said. Global gas market functioning and liquidity remain pivotal to energy security and the reliability of the global energy systems, as the world continues to face a great amount of turbulence amidst the ongoing energy crisis and continuing significant geopolitical risks in a tight and fragile market.”