Europe’s natural gas demand continues to be weak after last year’s energy crisis and most of the demand destruction will likely be permanent, according to France’s utility giant Engie.
European gas demand has slumped since the end of 2021 due to skyrocketing prices, the Russian invasion of Ukraine, and the cut-off of a large part of Russia’s pipeline gas supply to Europe. Governments have called for energy savings and industries have been using lower gas volumes due to the high prices and weakening activity.
“Depending on the size of these customers today, we have not seen the demand recovery from what happened last year,” Engie’s chief executive officer Catherine MacGregor said on the company’s earnings call on Tuesday, as carried by Bloomberg.
Demand destruction has been in the range of 10% to 20%, depending on the type of customers, MacGregor added.
“We think that this is here to stay to a large extent,” the executive noted.
“We don’t think that it will worsen, but we think it’s quite structural.”
MacGregor’s comments echo those of Vitol Group’s chief executive Russel Hardy, who said last month that some of the lost European demand for natural gas due to the energy crisis and record-high prices could never return.
“For gas, demand has plummeted in Europe, with double-digit percentage reductions. We expect some of the lost demand to be permanent,” Hardy told the Energy Intelligence Forum in October.
Earlier this month, analysts and industry professionals told Bloomberg that Europe’s natural gas demand could begin to rise this winter with higher electricity consumption in major markets and easing industrial demand destruction in the Eurozone.
A survey of economists carried out by Bloomberg has shown that the experts believe the plunge in industry gas demand could ease early next year. In addition, BloombergNEF sees power consumption returning to levels from before the energy crisis in some key European markets.
By Charles Kennedy for Oilprice.com
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