The chief executive of Vitol, the world’s top independent energy trader, said on Tuesday that some of the lost demand for gas in Europe following a recent spike in prices may be gone for good.
“Gas and power had a terrible year for demand (last year) And it continues to be very difficult in Europe… on the industrial side because of the damage over the last few months of high prices,” Russel Hardy told the Energy Intelligence Forum in London.
“We can expect some of that lost demand to stay lost forever,” he added.
Global gas prices leapt to all-time highs last year after Russia cut its gas supply to Europe, leading the region to import record amounts of liquefied natural gas (LNG) and slash demand, especially for industry.
Before its invasion of Ukraine, Russia sent around 155 billion cubic metres (bcm) of gas to Europe each year, mostly via pipelines, according to European Union figures.
In 2022, piped gas imports to the EU dropped to 60 bcm. This year, the EU expects them to fall to 20 bcm.
Some analysts say the price of reduced energy use could be a permanent contraction of industrial activity.
Europe’s biggest economy Germany is expected to shrink this quarter as industry is in recession, according to the country’s central bank.
Energy Aspects estimates 8% of the 2017-21 average industrial gas demand in Belgium, Britain, France, Germany, Italy, Portugal, the Netherlands and Spain may be gone for good by 2024.
Hardy said the conflict in the Middle East would probably have an impact on Egypt and in turn create LNG loading issues.
Supply fears have grown in Europe after Israel instructed operator Chevron to halt natural gas exports through a major subsea pipeline between Israel and Egypt.
Last year, Vitol sent about nine million metric tons of LNG to Europe, three times its 2021 figure of about 3 million tons, Hardy added.
The two other speakers on the panel – the CEO of trading house Gunvor, Torbjörn Törnqvist, and the head of oil trading at Trafigura, Ben Luckock – missed the event after climate protesters blocked the entrance to the conference.
(Reporting by Marwa Rashad Editing by Mark Potter)