Global Gas Markets: Living without Russian Gas

Download the full report.

The global gas market has undergone fundamental changes in 2022. A critical question for the industry in 2023 is how the market will recalibrate and rebalance with this year being the first full calendar year of minimal Russian pipeline flows to Europe. The reshaping of gas flows in Europe will have consequences for the rest of the global gas market.

Global LNG. Market tightness continues in 2023. However, lower European imports will allow growth to return in Asia Pacific markets.

North America. Rising associated gas production, limited domestic demand and export growth will keep storage inventory above the five-year average and Henry Hub price to average around $3/MMBtu in 2023.

Latin America. The year 2023 may be a year of strategic actions that could transform Latin American gas markets with Mexico joining the LNG exporting club and other countries setting up implementation plans to unlock their gas resources.

Europe. Continued weak demand and strong storage inventory means prices are expected to trade around €45/MWh (US$14/MMBtu) over summer 2023 before rising to €74/MWh (US$23/MMBtu) for winter 2023. Nonetheless, the loss of short-term supply flexibility means upside risk remains significant.

Eurasia. Assuming that the remaining flows continue at current rates, Russia's annual piped gas deliveries to Europe are expected to fall another 35 Bcm to 49 Bcm in 2023.

Australia. The renewed heads of agreement with east coast LNG projects and strengthened export controls will have limited impact on exports in 2023, assuming a normal weather conditions for domestic demand. Higher demand than expected may require exporters to prioritize supply to the domestic market.

China. Muted economic rebound post "zero-COVID" policy, rising coal and renewable availability, and the planned ramp up of Russian pipeline supply will limit LNG imports growth to 5 million metric tons (MMt) in 2023.

South Asia. Affordability of spot LNG will be a key concern that will determine if natural gas growth materializes in South Asia.

Southeast Asia. High-priced LNG has delayed import plans for new markets, but the region continues to push ahead with plans to shift to natural gas.

For full details, download the full report.

Posted 20 April 2023

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.