Global Gas Security
Review 2023
Including the Gas Market Report, Q3-2023

INTERNATIONAL ENERGY AGENCY
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MoroccoSenegalSingapore
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ThailandUkraineAbstract

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Abstract
Russia’s invasion of Ukraine in 2022 triggered the first truly global
gas crisis, with natural gas and LNG markets contending with
supply disruptions and unprecedented price volatility. While theimmediate effects of last year's supply shock have eased in recent
months, the structural changes that emerged in 2022 will persist for
years – and should be taken into account both by policy makers and

The Global Gas Security Review has provided a thoroughassessment of the evolution of gas supply security and LNG
contracting trends each year since its first publication in 2016. This
year’s edition includes the latest insights of the IEA’s quarterly Gas
Market Report, as well as a special spotlight on natural gas storageand evolving regulatory frameworks, taking into account themarket players.

increased need for supply flexibility.

In this context, the architecture of global gas supply security and theunderlying flexibility of the market need to be carefully reassessed
through an ever-closer dialogue between responsible producers
and consumers. Ensuring secure supplies of LNG, in particular, will
require policy makers, in close coordination with private actors, tofacilitate the development of innovative commercial offerings, novel

Beyond the growing complexity of gas supply security both in the
short and long term, the decarbonisation of gas and the broader
energy system will require the deployment and scaling up of lowemission gases. Part of the IEA’s Low-Emission Gases Work
Programme, this year’s Review includes a special section on this
topic, with a focus on the storage of low-emissions gases and the

procurement mechanisms and new co-operative frameworks.

future role of liquefied low-emissions gases in the international
maritime sector.

Since its establishment in October 2022, the International Energy
Agency’s (IEA) Task Force on Gas and Clean Fuels Market
Monitoring and Supply and Security has provided key market
updates and a platform for the effective exchange of data andinformation among members. The Task Force has worked closelywith the government of Japan ahead of the 12th LNG ProducerConsumer Conference on 18 July 2023, co-organised by the IEAPAGE | 3

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and Japan’s Ministry of Economy, Trade and Industry (METI).

Table of contents

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Table of contents
Executive Summary - Towards a New Global Gas Market.......................7

European gas demand dropped by over 10% in the first half of 2023 . 27

A new global gas market is taking shape in the aftermath of the 2022
supply shock ........................................................................................... 8

Lower gas burn in OECD Europe’s power sector was the main driverbehind reduced gas demand in Q2 2023 ............................................. 28

Natural gas markets moved towards a gradual rebalancing in H1 2023 9

Asian gas demand is expected to recover by 3% in 2023, supported bylower prices .......................................................................................... 29

Demand reductions played a key role in the softening of market
fundamentals ........................................................................................10

China and emerging Asia returned to demand growth in the first half of2023 ...................................................................................................... 31

Softer market conditions in H1 2023 are no reason for complacency
ahead of winter .....................................................................................11

US natural gas production continues to expand in 2023, principally
driven by higher gas output from shale plays ....................................... 32

Risks and uncertainties remain ahead of the 2023/24 northernhemisphere winter.................................................................................12

US natural gas production rose to above the 100 bcf/d mark in the firsthalf of 2023 ........................................................................................... 33

Full storage sites are no guarantee against winter volatility and the riskof renewed market tensions ..................................................................13

A new baseload: LNG accounted for close to 40% of Europe’s gas
consumption in H1 2023 ....................................................................... 34

The 2022 gas supply shock transformed natural gas markets in a
structural manner ..................................................................................14

LNG continued to substitute Russian piped gas in Europe’s supply mix
in H1 2023 ............................................................................................ 35

LNG became a new baseload supply for the European market ...........15

Global LNG trade grew by 3% in first half of 2023, primarily supportedby the United States ............................................................................. 36

China’s active contracting strategy is set to reinforce its position in LNG
trading and future optimisation of global LNG flows .............................18

The United States is expected to become the world’s largest LNG
supplier in 2023 .................................................................................... 39

Gas market update and short-term forecast ...........................................19
Global gas demand is expected to remain broadly flat in 2023 before
returning to moderate growth in 2024 ...................................................20

Global LNG market growth is expected to moderate to 4% in 2024 .... 40
Asian spot LNG and European hub prices fell to a two-year low in Q2
2023 ...................................................................................................... 41

The Asia Pacific region is expected to account for over 80% of demand
growth in 2023-2024 .............................................................................21

Asian spot LNG prices are expected to trade above TTF during thesecond half of 2023 .............................................................................. 42

North American natural gas demand is expected to decline in 2023 andremain flat in 2024 ................................................................................22

Gas storage levels remained well above their historic average in Q2
2023 ...................................................................................................... 43

US gas consumption fell by over 0.5% in H1 2023 amid an
unseasonably mild winter and subdued economic activity ...................23

EU and US storage sites closed Q2 2023 with 77% and 64% fill levels,
respectively ........................................................................................... 44

Healthy hydro availability weighs on natural gas demand in Central andSouth America ......................................................................................24

LNG contracting and flexibility update.................................................... 45

Lower gas consumption in Argentina and Brazil depressed gas demandin Central and South America in Q1 2023 ............................................25
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Update on LNG contracting trends ....................................................... 46

Table of contents

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Flexible LNG played a key role in maintaining gas supply security inEurope in 2022......................................................................................47

Spotlight on natural gas storage ............................................................. 64

Close to 90 bcm/yr of LNG liquefaction capacity sanctioned since
Russia’s invasion of Ukraine .................................................................48

Key natural gas storage policies and regulations initiated since
February 2022 ...................................................................................... 66

The 2022 gas supply shock put natural gas storage in the spotlight ... 65

The United States alone accounted for 90% of the LNG FIDs
sanctioned in 2022-H1 2023 .................................................................49

Global natural gas and LNG storage capacity is set to expand by 10%
in the next five years............................................................................. 67

North America remained the largest source of new LNG export
contracts in 2022...................................................................................50

China alone is expected to account for half of UGS capacity additions
by 2028 ................................................................................................. 68

Portfolio players and Asian buyers continue to lead LNG contracting
activity on the import side .....................................................................52

The European Union and its member states introduced mandatory filltargets in 2022 ...................................................................................... 69

Long-term agreements continue to dominate
the contracting landscape .....................................................................53

The EU’s new storage regulation sets a UGS fill target level of 90% by
1 November .......................................................................................... 70

Destination-flexible contracts accounted for half of the volumes
contracted in 2022 ................................................................................54

Japan is set to introduce the Strategic Buffer LNG ahead of the2023/24 winter season ......................................................................... 71

Portfolio players: Key enablers of market flexibility and liquidity ..........55

The Strategic Buffer LNG provides a new LNG security framework withclose co-operation from the private sector ........................................... 72

Portfolio players’ net open position is set to widen further over the
medium term .........................................................................................56

Australia implemented the East Coast Gas System Framework in May
2023 ...................................................................................................... 73

LNG portfolio players’ contractual position and contracted ratio, 20182026 ......................................................................................................56

Storage is a key contributor to supply flexibility during the southernhemisphere winter ................................................................................ 74

Contracted volumes are set to increase marginally over the medium
term .......................................................................................................57

Annex: Natural gas storage capacity and regulatory frameworks inselected markets* ................................................................................. 75

North America is set to become the world’s largest source of active
LNG export contracts ............................................................................58

System integration of low-emission gases ............................................. 80

Destination-flexible contracts and uncontracted capacity expand overthe medium term ...................................................................................59

Low-emission gases play a key role in the pathways to net zero
emissions by 2050 ................................................................................ 81

Contract expiry creates new marketing opportunities in the medium
term .......................................................................................................60

Low-emission gases naturally lead to a more complex gas system .... 82
Underground storage plays a critical role in unleashing biomethane’s
full potential .......................................................................................... 83

Around 150 bcm of LNG contracts are set to expire by 2026 and over
250 bcm by 2030 ..................................................................................61

Biomethane production plants display limited short-term variability andseasonality ............................................................................................ 84

On the export side, North America is driving growth in the number ofgas-to-gas indexed contracts ................................................................62

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The first open seasons for hydrogen storage were launched in Europe
in 2023 .................................................................................................. 85

Oil-linked pricing remains dominant in import contracts .......................63

Table of contents

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

European hydrogen storage development will require stakeholders tomake concentrated efforts ....................................................................86
Liquefied low-emission gases are expected to be central todecarbonising the maritime sector ........................................................87
Annex ..........................................................................................................92
Summary table ......................................................................................93
Regional and country groupings ...........................................................94
Abbreviations and acronyms ................................................................95
Units of measure ...................................................................................96

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Acknowledgements, contributors and credits .......................................97

Executive summary – Towards a New Global Gas Market

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

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Executive summary – Towards a New Global Gas Market

Executive summary – Towards a New Global Gas Market

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

A new global gas market is taking shape in the aftermath of the 2022 supply shock
The global energy crisis triggered by Russia’s invasion of Ukrainetransformed natural gas markets in a structural manner withprofound implications both for policy makers and market players.

the medium term, a fine balance should be struck between longterm contracts from non-Russian suppliers and exposure to anincreasingly liquid spot market. Our review of LNG contracting
trends indicates that European buyers have increased their LNG
contracting activity since Russia’s invasion of Ukraine, though they
still account for just 20% of total LNG volumes contracted since thestart of 2022 – while China’s share topped 25%.

LNG became a new baseload supply for Europe, while China’sbalancing role in the global gas market is set to increase. In thiscontext, the architecture of global gas supply security and theunderlying flexibility mechanisms need to be reassessed through anever-closer dialogue between responsible producers andconsumers.

Considering that in an increasingly globalised gas market, storage
regulations can have extra-regional implications, the International
Energy Agency carried out a survey on natural gas storage and its
evolving regulatory frameworks across the members of theInternational Energy Agency's Task Force on Gas and Clean Fuels
Market Monitoring and Supply and Security. It showed that in the

Global gas supply security remains at the forefront of energy
policymaking, with growing complexity both in the short- and longterm. While market fundamentals have significantly eased since thestart of 2023, and the European Union is well on track to fill up its

wake of the global gas crisis triggered by Russia, more stringent
storage regulations have been adopted across key markets.

storage sites to 95% of working capacity, full storage sites are no
guarantee against winter volatility. Our simulations show that acold winter, together with a full halt of Russian piped gas supplies tothe European Union starting from 1 October 2023, could easily

The integration of low-emission gases into the gas and broader
energy system will be crucial to decarbonise gas supply streams.
This year’s Global Gas Security Review provides a special focus on
the storage of low-emission gases and the future role of liquefied

renew price volatility and market tensions.
The growing flexibility and liquidity of the global LNG market
was crucial in the response to the gas supply shock of 2022.
The non-observance of Russian piped gas contracts increased theEuropean Union’s reliance on spot procurements, which rose fromjust 20% of total gas supply in 2021 to over 50% in 2023. Through

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low-emission gases in the international maritime sector.

Executive summary – Towards a New Global Gas Market

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Natural gas markets moved towards a gradual rebalancing in H1 2023
Russia’s steep cuts in gas deliveries to the Europe Union – adrop of almost 80 bcm, equating to 15% of global LNG trade – put
unprecedented pressure on European and global gas markets in
2022. This gas supply shock caused by Russia led to areconfiguration of global LNG flows, drove natural gas prices to alltime highs, both in Asia and Europe, and necessitated areadjustment in gas demand. Natural gas consumption fell by an
estimated 1.5% in 2022 – similar to the drop experienced in 2020
following the first wave of Covid-19 lockdowns.

non-Russian pipeline suppliers faced heavy maintenance andunplanned outages, further tightening supply.
In this context, natural gas demand reductions played a key rolein the softening of market fundamentals. In OECD Europe,
natural gas demand fell by an estimated 10%, or over 30 bcm. Thiswas primarily driven by lower residential and commercial demand in
Q1, a sharp drop in gas use in the power sector during Q2 anddepressed gas consumption by industrial consumers. In key Asianmarkets, natural gas demand remained close to last year’s levels in
the first five months of 2023. While China returned to growth, thesegains were almost entirely offset by demand drops in Japan and
Korea, reflecting a mild Q1 and improving nuclear availability.
Relatively muted demand in Asia has been a key contributor to the

Since the start of 2023, natural gas markets moved towards a
gradual rebalancing due to timely policy action, efficient market
forces and favourable weather conditions over the 2022/23 heating
season. Spot gas prices in Asia and Europe fell by over 50% yearon-year in H1 2023, albeit remaining 140% and 180% above their
H1 average levels between 2016-20, respectively. In the UnitedStates, strong growth in domestic gas production, together with an
unseasonably mild Q1 2023, put downward pressure on benchmark

loosening of market fundamentals since the start of 2023.
Global gas demand is expected to remain broadly flat in 2023
and return to moderate growth of 2% in 2024, supported by the

The steep decline in natural gas prices in Asia and Europe
occurred despite a tight supply environment. Russia’s piped gas
deliveries to the European Union fell by over 75% (or 36 bcm) in H1
2023, while global LNG supply rose by an estimated 3% (or 9 bcm)
– insufficient to offset the decline in Russian piped supplies. Several

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expansion of economic activity and assuming a return to average
winter weather conditions in the Northern Hemisphere. The rapidly
growing markets in the Asia Pacific region are expected to accountfor around 80% of incremental gas demand to the end of 2024. This
short-term forecast is subject to an unusually wide range of
uncertainties stemming from the broader geopolitical andmacroeconomic environment.

Henry Hub prices, which fell by 60% year-on-year in H1 2023.

Executive summary – Towards a New Global Gas Market

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Demand reductions played a key role in the softening of market fundamentals
Year-on-year change in natural gas supply and demand in key Asian and European import markets, H1 2023 vs H1 2022
Natural gas demand*
Y-o-y change in bcm

20
10
0
- 10
- 20
- 30
- 40
- 50

DemandSupplyGlobal LNG supply
China - non-Russian piped imports
Europe - non Russian piped imports
Total y-o-y change

Domestic production in Europe and China
China - Russian piped imports
Europe - Russian piped imports

India

Japan & Korea

China

OECD Europe

Total y-o-y change
IEA. CC BY 4.0.

*Natural gas demand includes change in net storage injections in Q2.
Sources: IEA analysis based on ENTSOG (2023), Transparency Platform; Eurostat (2023), Energy Statistics; Gas Transmission System Operator of Ukraine (2023), Transparency
Platform; General Administration of Customs of the People’s Republic of China (2023), Major Import Commodities in Quantity and Value; ICIS (2023), ICIS LNG Edge; JODI (2023),
Gas World Database; NBS (2023), Output of Natural Gas; PPAC (2023), Gas Consumption.

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Y-o-y change in bcm

Natural gas supply

Executive summary – Towards a New Global Gas Market

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Softer market conditions in H1 2023 are no reason for complacency ahead of winterHigh natural gas inventory levels in key Asian and European
markets provide cautious optimism ahead of the 2023/24 heating
season in the Northern Hemisphere. However, full storage sites

LNG imports could fluctuate, with an uncertainty range of over 10
bcm through the 2023/24 winter.
Considering these risk factors, gas storage trajectories could
vary widely over the upcoming heating season. Our simulations
show that a cold winter, together with a full stop of Russian piped
gas supplies to the European Union starting from 1 October, could
renew market tensions. If we assume a mild winter and LNG flows

are no guarantee against winter volatility and the risk of
renewed market tensions.
The European Union inherited relatively high storage levels
after the 2022/23 heating season, with inventories standing 60%
above their five-year average. If injections continue at the averagerate observed since mid-April, EU storage sites will reach 90% of
their working capacity by early August and could be filled close
to 100% by mid-September. If Russian piped gas supplies were tocease completely in summer 2023, the European Union would still
be able to fill up storage sites to 90-95% of working capacity on
average by the start of the 2023/24 heating season.

remaining close to last year’s levels, storage sites would end theheating season with inventory levels above 50% of capacity even
without Russian piped gas. In contrast, a cold winter would put
substantial pressure on the market. Higher LNG flows (a 15% y-o-yincrease) would keep storage sites 34% full by the end of March.
Yet if LNG flows remain at 2022/23 winter levels, storage sites
would be just 25% full. Lower LNG availability (a 10% y-o-y decline)
would further depress inventory levels to below 20% of capacity.

Nevertheless, key uncertainties remain ahead of Europe’s
2023/24 winter season. A cold winter could increase natural gas
demand in the EU’s residential and commercial sectors by 30 bcm
compared to the 2022/23 heating season. Given geopoliticaluncertainties, a further decline in Russian piped gas deliveries
to the European Union cannot be excluded. If Russian piped gas
supplies were to fully stop from 1 October 2023, it would result in a
total shortfall of 10 bcm. Global LNG supply is expected toincrease by around 15 bcm y-o-y, though project delays and/or
unplanned outages could reduce incremental LNG supply. China’s
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Storage sites are typically less reactive when filled below 30% of
their capacity, as withdrawal ability is reduced due to the drop in
reservoir pressure. This could increase the risk of price volatility andsupply disruptions in the case of a late cold spell coupled with low
wind power output. Continued structural gas demand reductions –including via enhanced energy efficiency, the more rapid
deployment of renewables and quicker installation of heat pumps –will be required to ensure a secure gas balance for the 2023/24
winter.

Executive summary – Towards a New Global Gas Market

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Risks and uncertainties remain ahead of the 2023/24 Northern Hemisphere winterUncertainty ranges of key exogenous risks to the European and global gas balance for the 2023/24 heating season

Coldest wintersince 2009/10

120
100

uncertainty ranges (bcm)

80
60
40
20

Mildest wintersince 2009/10

Strong economic recovery
and cold winter prompts
higher LNG imports

Slower economic growth,
continued covid-lockdowns
and mild weather keeps
China's gas demand
depressed

0

Russian piped flows to
the EU continue at theircurrent level

Russian piped flows
are completely cut

Higher LNG supply
on improved feedgas
availability/methane savings

Lower LNG supply
on black swan
events-20-40

China's LNG imports

Russian piped gas to the European
Union

Global LNG supply

EU demand in the residential andcommercial sectors

IEA. CC BY 4.0.

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Note: Red indicates a tightening of the global/European gas balance. Blue indicates loosening of the gas balance.

Executive summary – Towards a New Global Gas Market

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Full storage sites are no guarantee against winter volatility and the risk of renewed market
tensions

100
90
80
70
60
50
40
30
20
10
0

Mild winter andstatic LNG supply
OctoberNovemberCold winterand high LNG supply
DecemberJanuary

Cold winterand static LNG supply

Cold winterand low LNG supply

February

Threshold for heightenedrisk of supply disruptions

March

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bcm

Potential EU gas storage trajectories without Russian piped gas under different scenarios during the 2023/24 winter season

Executive summary – Towards a New Global Gas Market

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

The 2022 gas supply shock transformed natural gas markets in a structural mannersuggest that the European premium is expected to stay in the
coming years, with TTF’s premium over Asian spot LNG prices

Russia's invasion of Ukraine profoundly transformed European andglobal gas markets. While the immediate effects of last year's
supply shock have eased in recent months, the structural changes
which emerged in 2022 will persist for years – and should beaveraging USD 0.3/MBtu through 2023-25.

The European Union’s exposure to the spot market is set toincrease if no long-term contracts are signed

carefully assessed both by policy makers and market players.

LNG: a new baseload supply for the European market

Through the past two decades, long-term contracts, together
with domestic production, met around 80-90% of EU gas
demand on an annual basis. The non-observance of Russian pipedgas contracts steeply increased the European Union’s reliance on
spot procurements, rising from just 20% in 2021 to over 50% in
2023. The share of spot volumes is expected to increase to
more than 70% by 2030 – if expiring contracts are not renewed
and no new contracts are signed.

The steep decline in Russian piped gas deliveries to the European
Union – a drop of close to 120 bcm through 2022-23 – reconfigured
global LNG flows towards Europe.
Consequently, the role of LNG in the European market
drastically shifted. While in the past, LNG cargoes supplied themarginal molecule, LNG is now acting as baseload, in a similar
fashion as Norwegian or North African piped gas. The share of LNG
in the European Union’s gas demand rose from an average of 12%
over the 2010s to close to 35% in 2022 – a share similar to
Russia’s piped gas before the invasion of Ukraine.
Europe has repositioned itself as the new premium LNG
market. TTF was trading at USD 6/MBtu above Asian spot LNG
prices in 2022. The price signal provided by TTF and other liquid
European hubs was crucial to attract the necessary volumes offlexible LNG to Europe. Forward curves at the end of June 2023

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This will naturally increase Europe's exposure to the greater
volatility of spot markets over the medium term. Hence, a finebalance should be struck between non-Russian long-term
contracts and procurements from an increasingly liquid spot market.
A higher share of long-term contracts could potentially provide
greater price and supply stability. Natural gas producers andconsumers should work closely together to reduce the emission
intensity of gas and LNG supply, in order to hedge againsttightening emission regulations.

Executive summary – Towards a New Global Gas Market

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

LNG became a new baseload supply for the European market

share in total EU gas demand (%)

The share of LNG and Russian piped gas in the European Union’s natural gas demand (2001-23)
50%

40%

30%

20%

10%

Share of Russian piped gas

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

0%

Share of LNG
IEA. CC BY 4.0.

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Sources: IEA analysis based on ENTSOG (2023), Transparency Platform; Eurostat (2023), Energy Statistics; Gas Transmission System Operator of Ukraine (2023), Transparency
Platform; ICIS (2023), ICIS LNG Edge; IEA (2023), Natural Gas Information.

Executive summary – Towards a New Global Gas Market

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Gas supply flexibility options need to be reassessed amid thephase-out of Russian piped gas imports into the European Union

China’s role as a balancing market is set to increase, withpotential ripple effects for energy supply security and clean
energy transitions

Russian piped gas contracts included significant intra-annual
and inter-annual flexibility, with the nomination rights ultimately
lying with the buyers. This flexibility – underpinned by the country’s
huge swing fields – played a key role in meeting short-term demandvariability and seasonal swings. This contributed to the balancing ofEuropean and global gas markets. Overall, the inter-annual

Prior to the 2022 gas supply shock, Europe played a key role inbalancing the global gas market. This role was underpinned byseveral unique features of the European market, including: 1)
flexible piped gas supply from Russia; 2) coal-to-gas switchingpotential in the power sector; 3) spare LNG regasification capacity;4) vast underground storage capacity; 5) open, non-discriminatory
third-party access to natural gas infrastructure and 6) liquid, welltraded gas hubs.

flexibility provided by Russian piped gas averaged close to 10 bcm
on an annual basis through the 2010s. Intra-annual swings
averaged close to 200 mcm/d between 2016-21, amounting to over
10% of EU gas demand on a cold day.

Russia’s steep gas supply cuts in 2022 largely eroded Europe’s
role as a balancing market. The unprecedented 20% drop in
China’s LNG imports – reflecting lower spot procurements andexercising destination flexibility rights in long-term LNG contracts –was a key factor in enabling higher LNG shipments to the European
market.

This structurally lower gas supply flexibility means that otherflexibility options, such as storage and LNG peak-shaving anddemand response, will have to play a greater role in coming
years. Based on projects currently in development, global natural
gas and LNG storage capacity in import markets is expected to
expand by 10% (or 45 bcm) during 2023-28. In addition, a closer
dialogue between producers and consumers should facilitate thedevelopment of innovative commercial offerings, newprocurement mechanisms and co-operation frameworks
favouring a more flexible supply of LNG. A prime example is thecoordination mechanism agreed between Japan and Thailand,building on seasonal differences in natural gas demand in the twocountries.
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In contrast to Europe, China’s role as a balancing market is
expected to increase over the medium term, especially when
considering the country’s active role in securing LNG contracts.
China alone accounted for 30% of all LNG sales and purchaseagreements (SPAs) signed in the past five years. As a result,
China’s share of active LNG contracts is expected to rise from 12%
in 2021 to close to 25% by 2030. This is set to boost the role ofChinese companies in LNG trading and the optimisation of global

Executive summary – Towards a New Global Gas Market

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

LNG flows. Nevertheless, China’s potential role as a balancing
market will have ripple effects, both in terms of energy supply
security and energy transitions:overwritten by supply security concerns or geopoliticalconsiderations.

China has limited underground storage capacity. At theend of 2022, China’s working gas storage capacity was

The medium- to long-term outlook for natural gas demand isbeing revised downwards

estimated at 18 bcm, accounting for just 5% of the country’s
annual consumption – well below the level in mature
markets. This contrasts with the European Union’s 100 bcm
of working storage capacity (accounting for over 25% ofannual gas demand), although China relies to a larger extent
on its domestic production and portfolio of LNG contracts.
••

The majority of China's LNG importers are state-owned
companies. Market-driven decision-making might be

The global gas crisis triggered by Russia deeply damaged the
medium- to long-term growth prospects for natural gas
demand. The sharp increase in natural gas prices reduced its
competitiveness vis-à-vis other sources of energy supply, while its
image as a “reliable” fuel has been called into question by steep
supply cuts of Russian piped gas.

China does not have the same access to flexible piped
gas supplies that Europe had in the past. Central Asianflows displayed often-negative seasonal swings due to cold
spells during the winter seasons, while Russian deliveries via
the Power of Siberia pipeline system have limited flexibility inabsolute terms.

Global gas demand growth for the period between 2020 and
2024 was reduced by 40% compared to projections prior to
Russia’s invasion of Ukraine. The IEA’s Gas 2021 report projected
an increase of 350 bcm through 2020-24, which is revised down to
200 bcm in our latest forecast. Europe alone accounts for more thanhalf of this downward revision. This reflects more stringent energy
efficiency standards, the accelerated deployment of renewables andA key contributor to China’s gas demand flexibility is thecountry’s significant gas-to-coal switching potential. In
2022, coal-fired generation rose by an estimated 1.9%,
largely at the expense of gas-fired power plants, which
reduced their output by close to 10% y-o-y. This translated
into higher emissions (estimated at 15 Mt CO2-equivalent),
further putting tensions on clean energy transitions.

quicker electrification of heat, as well as a reduced role of natural
gas in industry.
The IEA’s World Energy Outlook 2023 edition and the Gas report
Q4 2023 will provide an in-depth analysis of the medium- and longterm prospects of natural gas and gaseous fuels.
PAGE | 17

IEA. CC BY 4.0.

••

Executive summary – Towards a New Global Gas Market

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

China’s active contracting strategy is set to reinforce its position in LNG trading and future
optimisation of global LNG flowsbcm

The share of China in active LNG contracts (2010-30)
900

25%

800
20%

700
600

15%

500
400

10%

300
200

5%

Asia Pacific

Portfolio

EuropeOther regions

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

0

2010

100
0%

China share
IEA. CC BY 4.0.

PAGE | 18

IEA. CC BY 4.0.

Sources: IEA analysis based on ICIS (2023), ICIS LNG Edge.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

PAGE | 19

IEA. CC BY 4.0.

Gas market update and short-term forecast

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Global gas demand is expected to remain broadly flat in 2023 before returning to moderate
growth in 2024
Global gas consumption contracted by an estimated 1.5% y-o-y(or 65 bcm) in 2022 – comparable to demand drops seen in 2009
in the aftermath of the financial crisis and during the global Covid-19
pandemic in 2020. The bulk of the demand reduction wasconcentrated in key Asian and European import markets. All-timehigh prices in these markets supported gas-to-coal switching in the

Global gas supply is set to remain tight in 2023, as incremental
LNG supply (20-25 bcm) will not be sufficient to offset the expected
drop in Russia’s piped gas deliveries to Europe (a decline of over
40 bcm). While incremental gas supply is limited in 2023, it would
be enough to cover global gas demand assuming demandremains broadly flat, as expected. Most demand growth ispower sector and depressed gas use in energy-intensive industries(either via fuel-switching or production curtailments).

projected to be driven by the Asia Pacific region, the Middle East
and Africa; however, this growth is almost entirely offset by fallingdemand in North America and Europe. After its first decline in four

Preliminary data indicate that this downward trend continued
in H1 2023 across key gas markets. OECD Europe recorded thesteepest decline in natural gas consumption, with a drop of over
10% (or more than 30 bcm) y-o-y in H1 2023. This was primarily
driven by depressed gas use in industry, lower residential andcommercial demand in Q1, and a sharp drop in gas burn in the
power sector during Q2. In North America natural gas consumption
fell by an estimated 0.6% y-o-y (close to 5 bcm) amid unseasonably
mild weather conditions in Q1 and subdued economic activity. In
Asia Pacific natural gas demand remained close to last year’slevels in the first four months of 2023. While China and certain
markets in emerging Asia returned to growth, these gains were
almost entirely offset by the demand drops in Japan and Korea,
reflecting a mild Q1 and improving nuclear availability.

decades, China’s natural gas demand is expected to expand by justover 6% in 2023. The country’s LNG imports are forecast to
increase by close to 15%, albeit remaining below the record levels
reached in 2021.
Global gas demand is expected to return to moderate growth of 2%
in 2024, supported by the expansion of economic activity andassuming a return to average winter weather conditions in the
Northern Hemisphere. Again, the bulk of demand growth isprojected to be concentrated in Asia Pacific, accounting for around
80% of incremental gas demand to the end of 2024.

PAGE | 20

IEA. CC BY 4.0.

This short-term forecast is subject to an unusually wide range of
uncertainties, stemming from the broader geopolitical andmacroeconomic environment.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

The Asia Pacific region is expected to account for around 80% of demand growth in 2023-2024
200

5%

160

4%

120

3%

80

2%

40

1%

0

0%

- 40

-1%

- 80

-2%

- 120

-3%

- 160

-4%
2020
EuropeAsia Pacific2021
North America

2022
Eurasia

Middle East

2023
Africa2024

Central and South America-5%

Y-o-y growth
IEA. CC BY 4.0.

PAGE | 21

IEA. CC BY 4.0.

- 200

Y-o-y change in %Y-o-y change in bcm

Y-o-y change in global natural gas demand, 2020-2023

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

North American natural gas demand is expected to decline in 2023 and remain flat in 2024
Natural gas consumption in North America fell by an estimated
0.6% (close to 5 bcm) y-o-y in the first half of 2023. Unseasonably
mild weather conditions in Q1 together with subdued businesswith a decline in natural gas prices increasing the competitivenessof gas-fired power plants. Consequently, the share of gas-fired
power generation rose to above 39% in the first half of 2023, up

activity are weighing on natural gas demand.

from 35% during the same period in 2022.

In the United States natural gas consumption dropped by just over
0.5% y-o-y in the first half of 2023 according to preliminary data.
This was largely driven by lower natural gas use in the residential
and commercial sectors as unseasonably mild weather conditions
put downward pressure on space heating requirements. Heating
degree days during the January-April period were down by 8% y-oy, which decreased gas demand in the residential and commercial
sectors by more than 9% compared with the same period in 2022.
In January and February 2023, the United States saw its lowest
levels of natural gas consumption since 2018. In addition, theindustrial sector also recorded a 2% decrease in consumption in
H1 2023 amid subdued economic activity. The US Manufacturing
Purchasing Managers’ Index (PMI), published by the Institute for
Supply Management, averaged 47 over the first half of 2023,

Natural gas consumption in Canada dropped by an estimated 1% yo-y in the first half of 2023. This decrease can be attributed to the
reduction in demand from the residential and commercial sectors.
Gas demand continued to increase among wholesale customers,
particularly in large industry and power generation, due to theongoing transition from coal to gas in the power mix. Mexico’s
apparent natural gas consumption remained close to last year’slevels in the first five months of 2023.
This forecast expects North American gas demand to remainbroadly flat in 2023. In the United States slower economic growth isset to depress gas demand in industry, while the unseasonably mild
Q1 reduced gas use in the residential and commercial sectors,
weighing on the outlook for the full year. The economic slowdown
together with the rapid expansion of renewables is set to moderate
the growth in gas-fired generation during the second half of 2023.
North American gas consumption is expected to decline by 0.5% in
2024. Residential and commercial gas demand is projected torecover under the assumption of average weather conditions, while
the continued expansion of renewables is expected to reduce gas

indicating a contraction in manufacturing activity.
In contrast, gas-to-power demand increased by 8% y-o-y in H1
2023, amid lower hydropower output (down 6% y-o-y) and coal-togas switching in the power sector. Coal-fired generation declined by
25% y-o-y, largely in favour of gas-based power output. This can be
attributed to the continuing retirement of coal power plants, coupled
PAGE | 22

IEA. CC BY 4.0.

burn in the power sector.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

US gas consumption fell by over 0.5% in H1 2023 amid an unseasonably mild winter andsubdued economic activity

2%

110

0%

100

-2%

90

8%
6%
4%
2%
0%
-2%

-4%

80

-4%
-6%

2023

Jul

Aug Sep Oct Nov Dec

Y-o-y change (%)-8%

Total consumption

2022

Apr May Jun

Other

Feb Mar-10%

Residential andcommercial

Jan

-8%

Industry

-6%

70
60

10%

Power generation

bcf/d

120

Y-o-y change

Gas consumption by sector,
United States, H1 2023 vs H1 2022

Monthly natural gas consumption,
United States, 2022-2023

IEA. CC BY 4.0.

PAGE | 23

IEA. CC BY 4.0.

Note: bcf/d = billion cubic feet per day.
Sources: IEA analysis based on EIA (2023), Natural Gas Consumption; Natural Gas Weekly Update.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Healthy hydro availability weighs on natural gas demand in Central and South America
Natural gas consumption in Central and South America declined by
3% in 2022. This was primarily driven by lower gas demand in
Brazil, where gas-fired generation contracted by more than 60%

lower gas demand, Brazil reduced its piped gas imports from Bolivia
by 15% (or 0.5 bcm) y-o-y, while its LNG inflows dropped by 75%(or 1.6 bcm) y-o-y in the first half of 2023.

compared with 2021, following a recovery in hydropower
generation. The region’s gas demand continued to decline in Q1
2023, falling by over 5% (or close to 2 bcm) y-o-y amid healthy

Several other countries in the region experienced similar declines.
In Trinidad and Tobago natural gas production remained broadly
flat in Q1 2023 compared with the same period in 2022. The
country’s LNG exports rose by more than 8% y-o-y, suggesting thatdomestic gas consumption declined by over 5% y-o-y in Q1 2023.
In Venezuela observed gas consumption decreased by 13% (or0.8 bcm) y-o-y in the first four months of 2023. In Colombia gas
demand declined by 5% (or 0.2 bcm) y-o-y in the first five months of2023, primarily driven by lower gas burn in the power sector (down
27% y-o-y). The region’s smaller markets displayed varied demand
patterns over Q1 2023, not sufficient to offset the declines recordedhydro availability.
In Argentina, the region’s largest gas market, gas demand declined
by 1% (or 0.15 bcm) y-o-y in the first four months of 2023 according
to preliminary data. Higher hydro generation exerted downward
pressure on gas use in the power sector, which declined by close to
4% y-o-y. Gas demand in the residential and commercial sectors
dropped by 12% y-o-y, while gas use in industry increased by close
to 8% y-o-y.

in the five largest gas markets.

In Brazil gas consumption continued its steady decline, falling by an
estimated 15% (or close to 2 bcm) y-o-y in the first five months of2023, primarily driven by lower gas burn in the power sector. Gasfired power generation decreased by 37% (or 5 TWh) y-o-y in H1
2023, while hydro generation remained close to last year’s levels
during the same period. In Q2 2023 hydropower output declined by
3.5% y-o-y, which supported an increase in gas-fired power output,
albeit not sufficient to offset the losses in Q1. As a consequence of

Taking into account the declines in Q1 and assuming average
weather conditions for the remainder of the year, this forecast
expects natural gas demand in Central and South America todecline by almost 4% in 2023. Gas demand in 2024 is forecast to

PAGE | 24

IEA. CC BY 4.0.

increase by close to 2% in 2024 amid economic growth andassuming average hydro generation levels.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Lower gas consumption in Argentina and Brazil depressed gas demand in Central and SouthAmerica in Q1 2023
Monthly natural gas consumption, Central and South America, 2022-Q1 2023

bcm

12

10

8

6

4

2

0

J

F

M

A

M

J

J

A

S

O

N

D

J

F

2022
Argentina

BrazilVenezuela

M

2023

Trinidad and Tobago

Colombia

Chile

Peru

Bolivia

Other

IEA. CC BY 4.0.

PAGE | 25

IEA. CC BY 4.0.

Sources: IEA analysis based on ANP (2023), Boletim Mensal da Produção de Petróleo e Gás Natural; BMC (2023), Informes Mensuales; Central Bank of Trinidad and Tobago (2023),
Statistics; CNE (2023), Generación bruta SEN; ENARGAS (2023), Datos Abiertos; ICIS (2023), ICIS LNG Edge; IEA (2023), Monthly Gas Data Service; JODI (2023), Gas Database;
MME (2023), Boletim Mensal de Acompanhamento da Industria de Gás Natural; OSINERG (2023), Reporte diario de la operación de los sistemas de transporte de gas natural.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Healthy hydro availability depressed gas-fired generation in Brazil in H1 2023, leading to asteep decline in LNG imports

30

5
4

20

3
2

10

1
0

0
-1

- 10

Y-o-y change in LNG imports (bcm)

Y-o-y change in power generation (TWh)Y-o-y change in quarterly hydropower and gas-fired electricity generation and LNG imports, Brazil, 2021-2023

-2
-3

- 20

-4
- 30

Hydropower
Q1

Q2

Q3

Q4

Gas-fired generation
Q1

Q2

2021

LNG imports
Q3

Q4

Q1

2022

Q2

-5

2023
IEA. CC BY 4.0.

PAGE | 26

IEA. CC BY 4.0.

Sources: IEA analysis based on EPE (2023), Monthly Review of the Electricity Market; ICIS (2023), ICIS LNG Edge; ONS (2023), Power Generation.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

European gas demand dropped by over 10% in the first half of 2023
Natural gas consumption in OECD Europe fell by more than 10%(or over 30 bcm) y-o-y during H1 2023. The pace of demand
reduction moderated from the 13% (or 22 bcm) drop experienced incoal- and gas-fired power plants, which saw their combined output
declining by over 20% (or close to 55 TWh). Coal-based generation
declined more steeply, reflecting the deteriorating competitivenessQ1 to a 10% (or 9 bcm) y-o-y decline during Q2. Lower gas burn inthe power sector accounted for 70% of the overall reduction in gas
demand in Q2, amid depressed electricity demand and strongerof coal-fired plants amid the sharp drop in gas prices and high costof emission allowances. Estimated gas demand in industry stayed
close to last year’s levels in Q2 2023. While the steep fall in gas
prices since mid-December 2022 supports gradually improving

renewable power output.

activity in gas-intensive industries, industrial sector gas demandremains 20% below its Q2 2021 levels.

Distribution network-related demand fell by an estimated 8% (or2.5 bcm) y-o-y in Q2 2023. This decline occurred despite a colder
spring, with heating degree days in April and May standing 10%
above their 2022 levels. Hence, non-weather-related factors explain
the bulk of this demand reduction. These include gas-saving
measures enacted in public buildings, fuel-switching in rural

For 2023 as a whole, OECD Europe’s gas demand is forecast to
decline by 7%. This is largely driven by lower gas burn in the power
sector, down by 15% amid rapidly expanding renewables and lower
electricity consumption. Gas use in industry is expected to stayhouseholds, the continued deployment of heat pumps, efficiency
gains and behavioural changes. Rising affordability issues are also

close to last year’s levels, as lower gas prices enable demand
recovery in the second half of the year, offsetting the losses in H1.
Considering the declines in the year to date, demand in theresidential and commercial sector is expected to fall by 4% in 2023.
In 2024, OECD’s Europe gas demand is forecast to increase by amoderate 1.5%, as the expected decline in gas for power
generation is not offset by higher gas use in other sectors. A returnto average temperature conditions would increase residential andlikely to have contributed to lower gas use in households.
Gas-to-power demand dropped by an estimated 20% (or 7 bcm) yo-y in Q2 2023. This steep decline was driven by a combination offactors. Subdued activity in energy-intensive industries together with
continued improvements in energy efficiency and behaviouralchanges depressed electricity consumption, which fell by around
7% (or 50 TWh) y-o-y in Q2. In addition, stronger renewable power
output and improving nuclear availability further reduced the call on

PAGE | 27

IEA. CC BY 4.0.

commercial demand, while gas use in industry is expected tocontinue its gradual recovery, albeit remaining well below its precrisis levels.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Lower gas burn in OECD Europe’s power sector was the main driver behind reduced gas
demand in Q2 2023
35

25%

28

20%

21

15%

14

10%

7

5%

0

0%

-7

-5%

- 14

-10%

- 21

-15%

- 28

-20%

- 35

2021
Q1

2021
Q2

2021
Q3

2021
Q4

Residential and commercial

2022
Q1

2022
Q2

Power

2022
Q3
Industry

2022
Q4

2023
Q1

2023
Q2

Y-o-y change in %Y-o-y change in bcm

Estimated quarterly change in gas demand, OECD Europe, 2021-2023-25%

Y-o-y change
IEA. CC BY 4.0.

PAGE | 28

IEA. CC BY 4.0.

Sources: IEA analysis based on Enagas (2023), Natural Gas Demand; ENTSOG (2023), Transparency Platform; EPIAS (2023), Transparency Platform; Trading Hub Europe (2023),
Aggregated consumption.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Asian gas demand is expected to recover by 3% in 2023, supported by lower prices
Following a 2% decline in 2022, natural gas demand in the Asia
Pacific region remained broadly stable in the first half of 2023.
While China and certain emerging Asian markets recorded ancountry faced disruptions due to widespread Covid-induced
lockdowns. China’s gas demand growth is partially supported byhigher domestic production, which rose by 6% (or 6 bcm) y-o-y inincrease in their gas consumption, this was almost entirely offset byfalling demand in Japan and Korea. Asian gas demand for 2023 is
projected to increase by 3% based on the assumption of weather
normalisation and modest gas consumption growth in India andthe first five months of 2023. The gradual recovery in gas demand
increased the call on LNG imports, rising by over 10% (or 4.5 bcm)
y-o-y in the first half of 2023, albeit remaining below the record
levels set in 2021. China’s gas consumption in 2023 is projected

emerging Asia. In 2024 we expect gas demand to continue to growby over 4%.

to increase by over 6%, led by the industrial and power sectors.
Stronger electricity demand together with reduced hydro output andlower gas prices are expected to benefit gas demand for power
generation for the remainder of the year. Assuming average
weather conditions, gas demand in the residential and commercial
sectors is projected to recover close to 2021 levels. In 2024 we
expect China’s gas demand to increase by 7%, supported byeconomic growth and higher gas burn for power.

Following the country’s first recorded drop in demand infour decades in 2022, China’s apparent natural gas consumption
returned to growth in Q1 2023, up by an estimated 6% (or 11 bcm)
y-o-y in the first five months of 2023. This was supported by theeasing of the country’s strict Covid policy, lower hydropower output
and prospects of stronger economic growth compared with lastyear. Gas burn in the power sector rose by an estimated 10% y-oy in the first five months of 2023, as lower hydro output (down by
23% y-o-y) increased the call on gas-fired power plants. In addition,
China experienced historic heat waves in the spring of 2023,
recording the highest temperatures in 100 years, leading to
production shortfalls at hydroelectric power plants. Preliminary datasuggest that natural gas use in industry and in the city gas
segment returned to growth, largely supported by the recovery of
economic activity compared with the first half of 2022 when theJapan’s gas consumption decreased by 12% (or 4 bcm) in the first
four months of 2023. Gas-fired power generation in the first threemonths declined by 16% (or 15 TWh) y-o-y according to data fromPAGE | 29

IEA. CC BY 4.0.

METI. This was primarily driven by lower electricity consumption(down by 6% y-o-y in electricity supply volume in the first fivemonths according to OCCTO data) and improving nuclear
availability. Japan’s nuclear power output rose by 47% (or 12 TWh)y-o-y in the first half of 2023. In addition, city gas sales forcommercial and industrial use in the first four months decreased by

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

3% and 12% respectively according to data from METI. For 2023
Japan’s gas demand is forecast to decrease by about 5% comparedwith the previous year. This is mainly driven by the power sector,
due to the increased operation of nuclear power plants. However,gas consumption may fluctuate depending on prevailingtemperatures and the operational status of nuclear power. Gas
demand in 2024 is expected to decrease by 1% compared with
2023, as improving nuclear availability together with the continued
expansion of renewable power generation are set to weigh on gas
burn in the power sector.

driven by the recovery of the fertiliser sector, up by 0.7 bcm (up
13% y-o-y). This growth follows the start-up of two new urea
production facilities at Sindri and Barauni in eastern India, as wellas the softening of global LNG prices since the beginning of theyear. India’s natural gas demand is expected to increase by 5% for2023, primarily driven by higher gas use in industry and for power.
Emerging Asia’s gas consumption increased by an estimated 3%
y-o-y in the first quarter 2023, with demand growth supported bylower LNG spot prices. Thailand, the region’s largest gas
consumer, recorded 3% y-o-y growth during Q1 2023, following a
10% drop in gas use in 2022 as a whole. This recovery was mostly
concentrated in the power sector and the domestic energy industry.
In Indonesia gas demand expanded by 4% y-o-y in the first fourmonths of 2023, led by industry and the power sector. In Malaysia
natural gas production rose by 1% y-o-y in the first four months of2023, while LNG exports rose by 5% y-o-y, suggesting an estimated
1% y-o-y growth in domestic gas consumption. Bangladesh andKorea’s gas consumption in the first four months of 2023 was 6%
lower than in the same period in 2022. According to data from
Korea Energy Economics Institute (KEEI), the country saw asignificant decrease in city gas demand, considered to have largely
been due to a warm winter driving down space heating
requirements. Gas demand for power generation declined by 4% yo-y in the first three months of 2023 amid improving nuclear
availability. For the full year of 2023, Korea’s gas demand is
expected to decrease by approximately 4% amid higher nuclear
power generation and the expansion of renewables. In 2024 we
expect gas consumption to decrease by 1%.
India’s gas consumption decreased by 2% y-o-y in the first fivemonths of 2023, following the 5% y-o-y decline observed in 2022.
The fertiliser sector maintained its dominant share at 32%, followedby city gas (21%), power generation (15%), refining (7%) and thepetrochemical sector (5%). Growth in India’s gas demand was
PAGE | 30

IEA. CC BY 4.0.

Pakistan increased their LNG imports by 0.5% and 10% y-o-y in
the first four months of 2023, respectively. This indicates a gradual
recovery in the two countries’ gas demand, driven by lower gas
prices and higher gas use in industry and especially in the power
sector. Bangladesh and Pakistan are highly dependent on imported
LNG and both countries experienced severe power outages in thespring of 2023, due to erratic weather conditions and difficulties inpaying for fuel imports. In 2023 and 2024 gas demand in emerging
Asia is projected to increase by a modest 2% and 3% respectively,
fuelled by growing economic activity and power demand.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

China and emerging Asia returned to demand growth in the first half of 2023
20

15%

15

10%

10
5%

5
0

Y-o-y change in %Y-o-y change in bcm

Estimated quarterly change in gas demand, selected Asian markets, 2021-2023

0%

-5

-5%

- 10
-10%

- 15
- 20

China
2021
Q1

2021
Q2

2021
Q3

Japan
2021
Q4

Korea

India

2022
Q1

Others*

Total

2022
Q2

2022
Q3

Y-o-y change
2022
Q4

2023
Q1

2023
Q2

-15%

IEA. CC BY 4.0.

PAGE | 31

IEA. CC BY 4.0.

* Others comprise Indonesia, Malaysia, the Philippines, Singapore and Thailand.
Sources: IEA analysis based on CQPGX (2023), Nanbin Observation; EPPO (2023), Energy Statistics; ICIS (2023), ICIS LNG Edge; JODI (2023), Gas World Database; Korea Energy
Economics Institute (2023), Monthly Energy Statistics; Ministry of Economy, Trade and Industry of Japan (2023), METI Statistics; PPAC (2023), Gas Consumption.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

US natural gas production continues to expand in 2023, principally driven by higher gas output
from shale plays
Dry natural gas production in the United States increased by an
estimated 5.5% (or close to 30 bcm) y-o-y in the first half of 2023,
with the average daily output above 100 bcf (or 2.8 bcm/d) during
the period. This strong growth was principally met by additional gas
supply from shale plays. Dry gas production in the Permian Basinincreased by an estimated 15% (or close to 10 bcm) y-o-y in H1

Haynesville Extension pipeline was completed, adding 4 bcm/yr ofexit capacity from the Haynesville play to the US Gulf coast.
In contrast, dry gas production in the Appalachian Basin – thelargest source of US gas supply with a share of over 30% in 2022 –contracted by an estimated 0.5% (or 1 bcm) y-o-y in H1 2023. Thiswas primarily driven by the Utica shale, where gas production
dropped by close to 8% y-o-y in Q1 2023, while output increased
marginally in the Marcellus play. Lower domestic demand together
with relatively high inventory levels reduced the call on Appalachiangas producers. In addition, midstream constraints are making it
difficult to increase supplies to demand centres, as long-haulinterstate pipelines were already running close to nameplate
capacity in 2022. The Mountain Valley Pipeline is expected to becommissioned by the end of 2023/early 2024 and would add
20 bcm/yr of transmission capacity from north-western West
Virginia to southern Virginia.

2023, accounting for over 35% of incremental gas output in the
United States. This production boost was supported by steadydrilling activity, with an average of 471 new wells drilled per monthin Q1 2023, representing a 17% increase compared with 2022.
Similarly, well completions experienced an increase of more than
15% y-o-y over the same period.
The Haynesville shale gas play in north-eastern Texas and northwestern Louisiana was the second largest source of incremental
gas supply in H1 2023. Dry gas output rose by close to 20% (or10 bcm) compared with the same period in 2022. Daily output
reached an all-time high of 0.45 bcm/d in April 2023. Drilling activity
reports show how elevated Henry Hub prices in 2022 provided a
supportive economic environment for new well development in theregion, with a 48% increase y-o-y in 2022 resulting in a monthly
average of 71 wells. 2022 also saw an increase of 22% in the wellcompletion rate. In May 2023 the expansion of the Acadian

PAGE | 32

IEA. CC BY 4.0.

We forecast natural gas production in the United States to continue
to increase, albeit at a slower pace compared with previous years
amid lower domestic demand and limited LNG export capacity
additions. We expect dry gas production to grow by 2% in 2023 andby less than 1% in 2024.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

US natural gas production rose to above the 100 bcf/d mark in the first half of 2023
Gas production by type, United States, 2018-2023

bcm

100

80

95

60

40

20

90
100
90
80
70
60
50
40
30
20
10
0

J MS J MS J MS J M

120.0
100.0
80.0
60.0
40.0
20.0
0.0

85

J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J
2018
2019
2020
2021
2022
2023

Appalachian Basin
Other dry shale
Permian Basin
Other associated shale
Other production
Total US gas

802018 2019 20202021
0

Total US gas (bcf/d)

100

Pipeline imports (net)Total US gas (bcf/d)

75

IEA. CC BY 4.0.

PAGE | 33

IEA. CC BY 4.0.

Sources: IEA analysis based on EIA (2023), Natural Gas Data; Natural Gas Weekly Update.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

A new baseload: LNG accounted for close to 40% of Europe’s gas consumption in H1 2023
Europe’s total gas supply dropped by 13% y-o-y (or 38 bcm) in H1
2023, largely driven by lower Russian piped gas deliveries. In thiscontext, LNG continued to gain market share and accounted forphase-out of the Groningen field. Pipeline gas deliveries from North
Africa declined by 5% y-o-y (or 0.8 bcm), with flows to Iberia fallingby 18% (or 0.8 bcm) and remaining broadly flat to Italy. Gas
supplies from Azerbaijan via the Trans Adriatic Pipeline rose by 4%almost 40% of Europe’s gas consumption in H1 2023 – a sharesimilar to Russia’s before its invasion of Ukraine. Meanwhile, theshare of OECD Europe’s gas demand met by Russian piped gas

y-o-y (or 0.2 bcm) in H1 2023.
Europe’s LNG imports rose by over 8% y-o-y (or 6.5 bcm) in H1
2023. LNG flows from the United States increased by 7% y-o-y (orclose to 3 bcm) to account for over 40% of incremental LNG supply
into Europe. This further reinforced the United States’ position asEurope’s leading LNG supplier, providing 47% of the region’s total
LNG imports and meeting over 15% of its gas demand.

stood at below 10% during the first half of the year.
Russian piped gas exports to OECD Europe fell by an estimated
65% y-o-y (or 38 bcm) in H1 2023. The profile of flows to theEuropean Union stayed relatively stable at an average of 60 mcm/d,
representing a decline of over 75% (or 36 bcm) compared with H1
2022. Exports to Türkiye fell by an estimated 20% y-o-y. Russia’s
LNG exports to Europe rose by 5% y-o-y (or 0.5 bcm). According to

The profile of Russian piped gas supplies remains a major
uncertainty over the forecast period. Assuming that flows to theEuropean Union continue at their H1 levels, deliveries of Russian
piped gas to OECD Europe would drop by more than 50% (or42 bcm) in 2023 compared with 2022. LNG imports are expected toshipping data, Belgium, France and Spain accounted for almost
80% of Europe’s total LNG imports from Russia in H1 2023.
Norway’s piped gas supplies to the rest of Europe declined by
7.5% y-o-y (or over 4 bcm) in H1 2023 amid a higher level ofplanned maintenance and unplanned outages. Norwegian pipelinedeliveries to the European Union fell by 2.5%, while exports to theUnited Kingdom fell by around over 23% (or 3.2 bcm). NonNorwegian domestic production fell by an estimated 10% y-o-y(or close to 4 bcm) in the first five months of 2023. This was largely
driven by lower gas output in the Netherlands amid the continued

PAGE | 34

IEA. CC BY 4.0.

remain broadly flat in 2023 compared with last year. Following theincrease in H1 2023, OECD Europe’s LNG inflows are projected to
decline for the rest of the year, reflecting lower injection needs anda continuing decline in European gas consumption. However, acolder than average Q4 could lead to higher LNG import needs.
This forecast assumes that Russian piped gas deliveries stabilise attheir 2023 levels in 2024, while LNG imports increase by 3%.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

LNG continued to substitute Russian piped gas in Europe’s supply mix in H1 2023

Y-o-y change in bcm

Y-o-y change in European natural gas imports and deliveries from Norway, H1 2023 vs H1 2022
40
30
20
10
OthersUnited States

0
- 10
- 20
- 30
- 40

Russia - pipeline flows

Norway - pipeline flows

Others - pipeline flows

LNG
IEA. CC BY 4.0.

PAGE | 35

IEA. CC BY 4.0.

Sources: IEA analysis based on ENTSOG (2023), Transparency Platform; Eurostat (2023), Energy Statistics; Gas Transmission System Operator of Ukraine (2023), Transparency
Platform; ICIS (2023), ICIS LNG Edge; JODI (2023), Gas World Database.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Global LNG trade grew by 3% in first half of 2023, primarily supported by the United States
In the first half of 2023, global LNG trade expanded by 3% y-o-y (or9 bcm), supported by higher supply from the United States, Norway
and Qatar. Over the same period, LNG demand increased by 3% y-flows to France dropped by 14% (or 2.3 bcm) in the first half of 2023
amid widespread strike action in April and May. Higher LNG
supplies to Europe were facilitated by the commercial start-up of
several new floating storage and regasification units (FSRUs) inEurope. Germany commissioned its first three FSRUs in less than a
year, representing a total regasification capacity of 20 bcm/yr. In the
Netherlands, Gasunie commissioned the Eemshaven FSRU ino-y (or 9 bcm), mainly due to Europe (up by 8% y-o-y or 6.6 bcm)
and the Asia Pacific region (up by 2% y-o-y or 3 bcm).
From a supply perspective, this growth was driven by
North America and the Asia Pacific region, which respectively saw a
7% (or 3.8 bcm) and 3% (or 2.7 bcm) y-o-y increase in their LNG
output. The United States, Norway and Qatar were the main
contributors to this expansion. In the United States higher y-o-youtput was primarily driven by the continued ramp-up of Calcasieu
Pass and the return of the Freeport LNG export terminal to fullservice after a fire-induced outage in June 2022. The resumption of
production at the Hammerfest LNG terminal in Norway contributed
2.1 bcm to global supply growth. In Australia higher output from the
Prelude floating LNG (FLNG) and the Wheatstone terminal
supported 2.6% (or 1.38 bcm) y-o-y growth in the country’s LNG
exports in the first half of 2023. Additional y-o-y growth in LNG
supply was driven by Qatar, the continued ramp-up of
Mozambique’s Coral South FLNG, Indonesia and Algeria.

October 2022, with a regasification capacity 8 bcm/yr. In Finland,
Gasgrid’s Inkoo FSRU was commissioned in January 2023 with aregasification capacity of 5 bcm/yr.
LNG imports into the Asia Pacific region increased by a modest
2% y-o-y (or 3 bcm) in the first half of 2023. This was primarily
driven by China. After more than 13 months of year-on-year
declines, China’s net LNG imports started to recover in March 2023
and grew by 10.6% y-o-y (or 4.4 bcm) in the first half of 2023. New
regasification terminals are due to come online by the end of theyear, adding a further 20 bcm/yr to the existing capacity of
140 bcm/yr. Thailand’s LNG imports grew by a strong 30% y-o-y (or1.8 bcm), largely supported by the country’s declining domestic
production. India’s LNG imports remained broadly stable (down by aslight 0.3 bcm) compared with the first half of 2022. In April thecountry commissioned the Dhamra LNG import terminal (7 bcm/yr),

From a demand perspective, Europe continued to lead LNG
demand growth in the first half of 2023. The region’s net LNG

PAGE | 36

IEA. CC BY 4.0.

which adds more than 10% to India's existing regasification
capacity. This is India's seventh LNG import facility and the first on

imports rose by 8% y-o-y (or 6.6 bcm), largely driven by higher LNG
inflows to the Netherlands, Germany and Italy. In contrast, LNG

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

the east coast. We expect LNG demand in India to remain flat in
2023, as offshore gas production by Reliance Industries Ltd, India's
largest company by market value, reduces the need to import LNG.

In addition to existing LNG importers, Hong Kong, Viet Nam and
the Philippines all become first-time LNG buyers this year. The
world’s largest FSRU arrived in Hong Kong in April 2023 to serve
the city’s first LNG import terminal. The terminal has a regasification

Asian spot LNG prices moderated significantly from the beginning of2023 to trade at an average of USD 10/MBtu in Q2 2023, below the
price range of oil-indexed LNG contracts. This encouraged South
Asian buyers to come back to spot markets via tenders, especiallyas demand for electricity in the region has risen in the wake of heatwaves in spring 2023. For instance, Bangladesh saw the rate of its
LNG buy tenders awarded rise from less than 30% in 2022 to 85%
so far in 2023. However, the country delayed payments for both
long-term and spot LNG cargoes, following a depreciating currency
and broader financial difficulties. Delayed payments could impact
future interest in its spot tenders or raise the premiums for supplying
into the country due to higher financial risk. For the time being,capacity of 5.5 bcm/yr and is scheduled to start operations in mid2023. In Viet Nam, Thi Vai LNG terminal (1.36 bcm/yr) received its
commissioning cargo in early July from Bontang. Regasified LNG
will primarily supply two gas-fired power plants with a combined
capacity of 1.5 GW currently being built in the neighbouringprovince of Dong Nai. The Philippines started importing LNG in
April 2023 with the commissioning of its first LNG import facility,
located in Batangas Bay (7 bcm/yr). The country’s LNG importneeds are set to increase amid falling domestic production.
However, neither Viet Nam nor the Philippines had secured a longterm LNG supply contract as of June 2023.

Bangladesh's state-owned company Petrobangla has secured LNG
imports by signing an SPA with QatarEnergy Trading (1.1 bcm/yr for
15 years from 2026).

LNG imports in Central and South America recovered in Q2, up
24% (or 1 bcm) y-o-y, following a 27% (or 1 bcm) y-o-y decline in
Q1. Overall, in the first half of 2023, LNG imports rose slightly by
2% (or 0.2 bcm) y-o-y, mainly driven by higher imports into
Argentina (up 88% or 0.8 bcm) for power production. In contrast,hydroelectric production improved significantly this year in Brazil,
which saw its LNG imports fall by 80% (or 1.7 bcm) year-on-year in
the first half of 2023, with no deliveries until the end of April.

In contrast, Japan LNG imports declined by 12% (or 6 bcm) in thefirst half of 2023, amid improving nuclear availability, lower
electricity demand and high LNG stocks. Japan’s LNG imports in
May fell to the lowest in more than 20 years at 5.5 bcm (down by
28% y-o-y), as efforts to save energy and boost nuclear power

PAGE | 37

IEA. CC BY 4.0.

For the full year of 2023 we forecast global LNG trade to increaseby 4% (or 22 bcm). The United States alone is expected tocontribute half of the incremental LNG supply and become thereduced gas demand.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

world’s largest LNG exporter. This growth will be supported
primarily by the ramping up of the Calcasieu Pass LNG terminal andthe restart of Freeport LNG. Additional supply is expected from
improved feed gas availability in Algeria and Trinidad and Tobago,

end of 2023, although uncertainties remain around its ramp-up
schedule and initial utilisation rates. LNG demand in 2024 is
expected to be driven by Asia and Europe, with the two regions
competing for limited supply. Asian LNG imports are projected toincrease by 6% in 2024, primarily supported by China’s
procurement through its growing portfolio of long-term importcontracts. LNG inflows into Europe are forecast to increase by 3%,
driven by a moderate recovery in the region’s gas demand.

and the ramp-up of Coral South FLNG in Mozambique. Demand
growth is set to be largely driven by Asia. China’s LNG imports are
expected to increase by 15% over 2022 levels, while remaining
below their record levels of 2021, and heavily dependent on growthin domestic production and pipeline imports from Central Asia andfrom Russia with the planned ramp-up of the “Power of Siberia 1”
pipeline. After strong growth in Q1 2023, OECD Europe’s LNG
imports are expected to decline in the second half of 2023 amid
lower injection needs and a continued decline in European gas
consumption.
In 2024 global LNG trade growth is expected to moderate to 4% (orPAGE | 38

IEA. CC BY 4.0.

24 bcm) – well below the 8% average growth rate experienced
between 2017 and 2021. Below-average LNG liquefaction capacity
additions are expected to prolong tight supply conditions into 2024.
Incremental LNG supply is anticipated to be driven primarily by thegradual start-up of new LNG liquefaction plants in North America(Plaquemines LNG Phase 1, Golden Pass LNG Train 1, Fast LNG
Altamira), the ramp-up of Tangguh Train 3 in Indonesia and thestart-up of Grand Tortue Ameyim off Senegal and Mauritania.
Russia’s Arctic LNG 2 Train 1 is expected to start operations at theGas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

The United States is expected to become the world’s largest LNG supplier in 2023
Monthly LNG exports from Australia, Qatar and the United States, 2012-2023

IEA. CC BY 4.0.

PAGE | 39

IEA. CC BY 4.0.

Source: IEA analysis based on ICIS (2023), ICIS LNG Edge.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Global LNG market growth is expected to moderate to 4% in 2024
LNG imports and exports by region, 2015-2024
bcm

800
600

ActualIMPORTS

Forecast
North America

400

Middle East

200

Europe0

Eurasia
Central and South America-200

Asia Pacific

-400
-600
-800

AfricaEXPORTS
2015

2016

2017

2018

2019

2020

2021

2022

2023

2024
IEA. CC BY 4.0.

PAGE | 40

IEA. CC BY 4.0.

Source: IEA analysis based on ICIS (2023), ICIS LNG Edge.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Asian spot LNG and European hub prices fell to a two-year low in Q2 2023
Subdued demand, together with high storage levels and improving
supply fundamentals, continued to put downward pressure on
natural gas prices across key gas markets in Q2 2023. Asian spot

premium over European hub prices for the first time since Q1 2022,
averaging USD 0.7/MBtu above TTF month-ahead prices in June. If
Asian spot LNG prices maintain their premium, LNG inflows into

LNG and European hub prices traded below the estimated average
price of oil-indexed LNG contracts during Q2 and had dropped to a
two-year low by the end of May 2023.

Europe could decline in the second half of 2023.
In the United States, Henry Hub prices declined by 15% on thequarter to an average of USD 2.2/MBtu in Q2 2023 – their lowest
Q2 level since 2020. Strong growth in domestic production
combined with lower gas demand and above-average storagelevels put downward pressure on gas prices.

In Europe, TTF spot prices declined by 34% on the quarter to an
average of USD 11/MBtu, standing 63% below last year’s levels.
Strong LNG inflow, together with high inventory levels andcontinued demand reduction, put strong downward pressure on
European hub prices. By the end of May, TTF month-ahead prices
had dropped to below USD 8/MBtu – their lowest level in two years.
TTF’s premium over NBP narrowed to USD 0.7/MBtu in Q2 2023

Asian spot LNG followed a similar trajectory to European hub
prices. Spot LNG prices in Asia declined by 35% from Q1 to an
average of USD 11/MBtu in Q2 2023 – down by 60% comparedwith the same period last year. Less competition from Europe,
subdued demand and improving LNG availability weighed on prices.
By the end of May, Asian spot LNG prices had recovered their

TTF prices are expected to increase by 25% to average over
USD 17/MBtu in 2024, while Asian spot LNG rises by 20% to stayjust below USD 17/MBtu. TTF regains its premium over Asian spot
LNG prices to an average of USD 0.5/MBtu, allowing for a stronger
pull of LNG towards the European market. In the United States,
Henry Hub prices are expected to rise by 30% to USD 3.5/MBtu on
tighter supply-demand fundamentals.

PAGE | 41

IEA. CC BY 4.0.

from USD 10/MBtu in the same period last year. North-western
Europe’s increasing LNG regasification capacity and lower storage
injection needs eased congestion along the EU-UK interconnectors,
which in turn tightened the TTF-NBP price spread.

According to forward curves as of the end of June 2023, TTF is
set to average at just above USD 13.5/MBtu in 2023, with Asian
spot LNG averaging at USD 14/MBtu and Henry Hub averaging
USD 2.7/MBtu. Asian spot LNG prices are expected to have an
average premium over TTF of USD 1.3/MBtu during the second halfof 2023. Natural gas prices could strengthen again in 2024 amidtighter supply-demand fundamentals. Forward curves indicate that

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Asian spot LNG prices are expected to trade above TTF during the second half of 2023

USD/MBtu

Main spot and forward natural gas prices, 2020-2024*
60

40

20

2022
TTF

2023
Henry Hub

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1

Q4

Q3

Q2

0
2024

Asian spot LNG
IEA. CC BY 4.0.

PAGE | 42

IEA. CC BY 4.0.

* Future prices are based on forward curves as of the end of June 2023 and do not represent a price forecast.
Sources: IEA analysis based on CME (2023), Henry Hub Natural Gas Futures Quotes, Dutch TTF Natural Gas Month Futures Settlements; LNG Japan/Korea Marker (Platts) Futures
Settlements; EIA (2023), Henry Hub Natural Gas Spot Price; ICIS (2023), ICIS LNG Edge; Powernext (2023), Spot Market Data.

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Gas storage levels remained well above their historic average in Q2 2023
Storage sites opened the 2023 injection season 1 with inventory
levels standing well above their historic averages, as lower gas
demand depressed withdrawal rates over the 2022/23 winter.

levels by early August and could be filled close to 100% of theirworking capacity by mid-September. In Ukraine gas inventory
levels at the end of March 2023 were estimated at 9 bcm, rising to

Storage injections displayed a varied pattern in Q2 2023: while
the United States experienced above-average storage build-up,
injections in the European Union slowed compared with previous
years, albeit remaining sufficient to keep the bloc well on track to

10.5 bcm by the end of Q2. Ukraine has a target to build up gas
storage levels of 14 bcm by the start of the 2023/24 heating season.
In the United States storage sites opened the 2023 injectionseason 43% full, standing almost 20% (or 8 bcm) above their fiveyear average. Strong growth in domestic gas production allowed fora more robust storage build-up in the first half of the gas summer.
Net injections in Q2 were 7% (or 1.9 bcm) above their five-year
average and totalled 29 bcm. Consequently, US storages sites were
67% full by the end of June, standing 15% (or 10 bcm) above theirfive-year average. If injections return to their five-year average,

reach its 90% fill target by 1 November 2023.
In the European Union, as a consequence of below-average net
withdrawals, storage sites closed the 2022/23 heating season 55%
full and with inventory levels standing 67% (or 22 bcm) above theirfive-year average. Lower primary gas supply (domestic production
and imports) led to a slower storage build-up over the first half ofthe gas summer. Net injections fell 20% (or 5.5 bcm) below theirfive-year average to a total of 22 bcm in Q2 2023. While slower
injection rates moderated the European Union’s storage surplus,
inventory levels still stood 27% (or 16.5 bcm) above their five-year
average at the end of the Q2. Consequently, EU inventory levels
reached 77% of their working storage capacity at the end of June.
Assuming that storage injections continue at the average rate
observed since mid-April, EU storage sites would reach 90% fillstorage will be over 90% full by the beginning of November, which
typically marks the start of the heating season in the United States.
In Japan and Korea, closing LNG stocks stood 85% (or 6.5 bcm)
above their five-year average in April 2023. The LNG stocks ofJapan’s largest power generation companies stood at 2.1 Mt(3.1 bcm) at end of June 2023, 15% above their five-year average.

The injection season (or gas summer) in the markets of the Northern Hemisphere refers to theperiod between 1 April and 30 September.
PAGE | 43

IEA. CC BY 4.0.

1

Gas market update and short-term forecast

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Japan and Korea LNG stock inventory

120

120

15

100

bcm

EU underground storage inventorybcm

US underground storage inventory

100

12

80

80

60

60

40

40

20

20

3

0

0

0

Five-year range

9

Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep

6

Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep

Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep

Five-year average

2022/23

IEA. CC BY 4.0.
Sources: IEA analysis based on EIA (2023), Weekly Working Gas In Underground Storage; GIE (2023), AGSI+ Database; IEA (2023), Monthly Gas Data Service.

PAGE | 44

IEA. CC BY 4.0.

bcm

EU and US storage sites closed Q2 2023 with 77% and 64% fill levels, respectively

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

PAGE | 45

IEA. CC BY 4.0.

LNG contracting and flexibility update

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Update on LNG contracting trends
This section provides an overview of the most recent LNG
contracting trends, analysing LNG supply availability and theevolution of destination flexibility in LNG contracts. The analysis isfrom 26% in 2016 to over 41% in 2022. Portfolio players are key
enablers of short-term supply flexibility, facilitated by their net open
positions and commercial ability to resell long-term LNG supply tobased on the contractual positions of exporters and importers andtheir actual traded volumes, using the IEA internal LNG contract
database. Unless otherwise stated, only firm supply contracts aretaken into account. These include LNG SPAs, equity entitlements

customers on a short-term or spot basis.
The growing flexibility and liquidity of the global LNG market was
crucial in the response to the gas supply shock of 2022 – Russia’s
steep cuts to its piped gas supplies to the European Union totalled
almost 80 bcm, equating to close to 15% of global LNG trade andleading to a profound reconfiguration of global LNG flows. While
European LNG imports increased by 60% (or close to 65 bcm) in
2022, Asian LNG imports declined by 7%, primarily driven by lower
inflows to China, which saw an unprecedented drop of 20% in its
LNG procurements. The United States alone accounted for two-and tolling agreements linked to an LNG supply project that is either
operational, under construction or has reached a final investment
decision (FID).
Since the first issue of the Global Gas Security Review in 2016, the
LNG market has gained in depth and liquidity. Total traded volumes
expanded by 50% between 2016 and 2022, while both buyers andsellers are displaying a greater diversity in their commercial
preferences and flexibility requirements. The share of destinationfree contracts rose from 30% in 2016 to over 46% in 2022, largely
driven by the expansion of US LNG. Pricing terms are becoming
more diverse, with the share of oil-indexed LNG export contracts
declining from over 71% in 2016 to 59% in 2022, replaced by hub
indexation and hybrid pricing formulae.

thirds of the incremental LNG deliveries to Europe. The destination
flexibility in the contractual structures underpinning US LNG supply
was instrumental in enabling these higher LNG flows.
Without this strong LNG inflow, the European market would havebeen left in a significantly more vulnerable position ahead of the2022/23 heating season, with an increased risk of gas supply

In addition to traditional suppliers, the role of portfolio players in
LNG trade has increased significantly in recent years: theirprocurement contracts’ share of total LNG contracts in force rose

PAGE | 46

IEA. CC BY 4.0.

disruption. In contrast, price-sensitive buyers with high exposure to
the spot market faced a deterioration in the security of their gas andelectricity supply in 2022, with rotating power cuts introduced in
Bangladesh and Pakistan amid the inadequacy of gas supplies.

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Flexible LNG played a key role in maintaining gas supply security in Europe in 2022
Y-o-y change in global LNG exports and imports by key region, 2021-2022
Change in LNG imports

65
60

Y-o-y change in bcm

55

Other
Europe

China

50
45
40
35
30

Change in LNG supply

Lower demand inSouth America

EU

Lower demandin Asia

Supply growth fromother regions
Demand in otherregions

25
20

LNG export growthfrom the United States

15
10
5
0

EuropeAsia PacificSouth andCentral America

Other regions- demand

Other regions- supply

United States
IEA. CC BY 4.0.

PAGE | 47

IEA. CC BY 4.0.

Source: IEA analysis based on ICIS (2023), ICIS LNG Edge.

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Close to 90 bcm/yr of LNG liquefaction capacity sanctioned since Russia’s invasion of Ukraine
After a record year for FIDs in 2019, with almost 100 bcm/yr of newliquefaction capacity sanctioned, 2020 saw only one project
reaching FID (Energía Costa Azul in Mexico), with a capacity of

Phase 2 project (9 bcm/yr) reached FID in March 2023, with first
LNG expected by 2025. Port Arthur LNG Phase 1 (18 bcm/yr)
announced FID in March 2023. The project consists of two trains

4 bcm/yr. The steep decline in LNG liquefaction investment in 2020reflected the uncertainties created by the Covid-19 pandemic andfalling oil and gas prices. 2021 marked a return to LNG investment:
two projects with a total capacity of 52 bcm/yr reached FID. Qatar

with a target for commercial operations of 2027 and 2028. The Rio
Grande LNG phase 1 project (24 bcm) reached FID in July 2023.
The project consists of three trains, with first LNG expected in 2027.
In addition to these large-scale projects, the Congo FLNG project

sanctioned its 45 bcm/yr expansion project in February – the largest
FID in the history of LNG. In Australia, Woodside Petroleum took

was launched in April 2023. The first FLNG plant (0.8 bcm/yr) is set
to begin production in 2023. The project could be expanded to
4 bcm/yr by 2025 with the installation of a second FLNG. Offshore

Since Russia's invasion of Ukraine in February 2022, close to
90 bcm/yr of LNG liquefaction capacity has been approved, with theUnited States alone accounting for 95% of the new FIDs. In May
2022 the first phase of the Plaquemines LNG project (18 bcm/yr)
received FID. The project developers plan a phased start-up, which
could signify first LNG by the end of 2024 and the start ofcommercial operations by mid-2025. The Corpus Christi Phase 3
expansion project (14 bcm/yr) was sanctioned in June 2022 and it isexpected to come online by the end of 2025. In addition, one
floating LNG (FLNG) project in Malaysia (ZLNG Sabah) reachedFID in December 2022, with a capacity of 2.7 bcm/yr.
In the first half of 2023 over 50 bcm/yr of LNG liquefaction capacity
was sanctioned and/or started construction. The Plaqueminesat Altamira in Mexico, an initial FLNG production unit is set to be
deployed by July or August 2023 with a capacity of 1.9 bcm/yr.
According to the project developer, additional FLNG units are to beinstalled during 2024, scaling total liquefaction capacity up to
5.5 bcm/yr. In Gabon, the Cap Lopez FLNG project (1 bcm/yr)
reached FID in February with first LNG expected by 2026. Qatar
awarded an engineering, procurement, and construction contract for
its North Field South (NFS) expansion project (22 bcm/yr) in May
2023, although no FID has been announced yet.
Together with Qatar’s NFS, projects that reached FID or began
construction would add close to 250 bcm/yr of liquefaction capacity
to the end of 2030. This strong increase in LNG production capacity
could loosen market fundamentals and ease gas supply security
concerns in the second half of the decade.
PAGE | 48

IEA. CC BY 4.0.

FID on the Pluto LNG Train 2 project (7 bcm/yr) in November 2021.

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

The United States alone accounted for 90% of the LNG FIDs sanctioned in 2022-H1 2023

Nameplate capacity (bcm/yr)

FIDs for new LNG liquefaction capacity, 2014-2023
100

80

60

40

20

0

2014

2015

2016

United States
CanadaQatar
Malaysia

2017

2018

Indonesia
Mauritania and Senegal
Australia

2019

2020

Mozambique
Nigeria
Congo

2021

2022

Jan-July
2023

RussiaMexicoGabon
IEA. CC BY 4.0.

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IEA. CC BY 4.0.

Sources: IEA analysis based on various public statements.

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

North America remained the largest source of new LNG export contracts in 2022
In 2022, 60 bcm/yr of newly signed contracts were concluded with
post-FID projects, including portfolio players’ contracts. This
represents a 23% decline in contracting activity compared withstages of development in the United States and need long-term
offtake agreements to reach FID.
On the import side, portfolio players led contracting activity to
account for around 40% (or 24 bcm/yr) of the volumes signed in
2022. In terms of regions, Asia continues to dominate the2021. However, when pre-FID contracts are considered, the total
contracted volume in 2022 rises to just over 100 bcm/yr, an
increase of 20% compared with the total volumes contracted in
2021. More than 70% of the total contracted volume in 2022

contracting landscape with a 37% share (or 22 bcm/yr) of newvolumes contracted in 2022. China alone accounted for 21% of thecontracts signed in 2022. European buyers increased their LNG
contracting activity in 2022 in the aftermath of Russia’s invasion of
Ukraine. The volume of LNG contracted by Europe rose from4 bcm/yr in 2021 to close to 15 bcm/yr in 2022, its highest level inthe last five years. Hence, Europe’s share of post-FID LNG
contracts rose from 5% in 2021 to 24% in 2022. When pre-FID
contracts are considered, Europe’s share remains rather limited,

originated from North America and the Middle East.
On the export side, North America continued to dominate the LNG
contracting landscape, accounting for around half (or 30 bcm/yr) of
the volumes contracted in 2022. The second largest source of
newly signed contracts was the Middle East, with a share of 20%(or 11 bcm/yr). Portfolio players accounted for 15% (or 9 bcm/yr) of
the LNG supply contracts signed in 2022, well below the 32%
average during 2016-2020. The Asia Pacific region’s export share
increased from 3% in 2021 to 12% in 2022, primarily supported by
new LNG export contracts signed with producers in Australia andaccounting for 20% of the total volumes contracted in 2022.
In contrast, portfolio players’ share of the total contracted volumes(pre-FID contracts included) rose from 17% in 2021 to over 40% in
2022, highlighting their key role in bridging the gap between certain
buyers’ reluctance to sign long-term contracts and the sellers'

Brunei.
When pre-FID contracts are considered, North America’s
dominance is even more pronounced, with the region accounting for
70% (or 70 bcm/yr) of all the volumes contracted in 2022. This isreflective of the strong pipeline of LNG projects that are at various

imperative to secure long-term contracts before sanctioning new
projects. Notably, over 70% of the import contracts signed by

PAGE | 50

IEA. CC BY 4.0.

portfolio players are associated with North American LNG projects.

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

In the first half of 2023, 16 bcm/yr of firm contracts were concluded,
representing a decline of 10% compared with the same period in
2022. When pre-FID contracts are included, the total volume ofcontracts rises to 45 bcm/yr – almost 10% higher than the total
volumes contracted in the first half of 2022. The slowdown incontracting activity is partly reflective of the limited uncontracted
capacity available (both at existing LNG liquefaction plants andprojects that are under construction or have reached FID), as wellcontracts concluded in the first half of 2023. When pre-FID
contracts are included, their share rises to 36% of the total volumes
contracted in the year to date. The majority of the portfolio offtake
contracts were signed with North American projects. Asian buyers
accounted for 46% of the total volumes contracted in the first half of2023, with the bulk of them destined for China. In contrast,
European buyers accounted for just 18%. The relatively small shareof European buyers might reflect the uncertainties surrounding theas the uncertainties related to the long-term future of natural gas.

future of natural gas in Europe.

On the export side, contracting activity was dominated by the
Middle East, accounting for 70% (or 11 bcm/yr) of the contracted
volumes. This has been largely driven by the renewal of offtakeagreements with Oman. North America accounted for 23% (or4 bcm/yr) of the new, firm export contracts. However, when pre-FID
agreements are considered, North America’s share rises to 63% of
the total volumes contracted in the year to date.
On the import side Asian buyers continue to play a dominant role,accounting for 60% (or 10 bcm/yr) of the firm volumes contracted in
the first half of 2023, with China alone concluding 8 bcm/yr ofofftake agreements. Europe accounted for 17% (or 3 bcm/yr) of the

PAGE | 51

IEA. CC BY 4.0.

contracts signed in the year to date, with most of the offtakeagreements signed with projects in North America and the Middle
East. Portfolio players’ share stood at 24% (or 4 bcm/yr) of the firm

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Portfolio players and Asian buyers continue to lead LNG contracting activity on the import side
Volume of contracts concluded in each year split by exporting and importing source, 2018-2023

IEA. CC BY 4.0.

PAGE | 52

IEA. CC BY 4.0.

Notes: Contracted volumes used for the analysis are associated with confirmed export projects that have taken FID. 2023 represents volumes signed by the end of June 2023.
“Portfolio” volumes are contracted by a market player who may source product from one or multiple regions to fulfil contractual obligations.
Source: IEA analysis based on ICIS (2023), ICIS LNG Edge.

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Long-term agreements continue to dominate the contracting landscape
LNG contracting activity in 2022 indicates a trend towards longer
contract durations, a stronger interest in large contracts and anincrease in the number of destination-flexible contracts.

Medium-sized contracts (2-4 bcm/yr) accounted for 30% and small
contracts (< 2 bcm/yr) for 40% of the total volumes contracted in
2022. In H1 2023 small contracts were the majority, potentiallyindicating that buyers are withholding from signing up for large

Long-term agreements (with a duration of over 10 years) havedominated the contracting landscape since 2018. In 2021 theyaccounted for 84% of contracted volumes and for 88% in 2022, theirhighest share in the last three years. This high share was driven by
Asian buyers, which accounted for 42% of contracted long-term
volumes; China alone was responsible for 23%. Agreements with amedium-term duration (between five and ten years) accounted for
12% of the volumes contracted last year, with portfolio players
acting as offtakers. In the first half of 2023, the share of long-term
contracts stood at 78%, with portfolio players acting as offtakers forvolumes amid future market uncertainties.
The share of destination-fixed volumes in newly signed contracts
averaged 78% during 2020 and 2021, representing a sharp
increase from just 22% during 2018 and 2019, when new FIDs in
the United States supported more flexible contractual structures. In
2022 the share of destination-free contracts rose compared with2020 and 2021, accounting for around half of the newly contracted
volumes. Around 75% of destination-flexible contracts wereassociated with North American projects. The bulk of destination-some of them. The strong price volatility seen in 2022 and growing
supply uncertainty could have reminded both buyers and sellers of
the importance of long-term contracts to secure a stable priceoutlook and reduce short-term price variability.

flexible volumes were contracted by portfolio players (75%) andEuropean buyers (25%). In contrast, the majority of destinationfixed volumes were contracted by Asian buyers. China accounted
for 40% of the destination-fixed contracts concluded in 2022. In H1
2023 the share of destination-fixed contracts rose to 76%, primarily
supported by the contractual preferences of Asian buyers. Despite
the recent increase in destination-fixed contracts, the share ofdestination-free volumes in total contracted volumes is set to

In volume terms, large contracts (over 4 bcm/yr) accounted for 30%
of contracted volumes in 2022 – their highest share since the IEA
Global Gas Security Review started tracking LNG contracting trends
in 2015. This relatively high share of large contracts is underpinnedby three SPAs, two where portfolio players acted as offtakers and amajor contract signed between QatarEnergy and China’s Sinopec.

PAGE | 53

IEA. CC BY 4.0.

increase over the medium term due to the continued expiry oflegacy contracts with destination clauses.

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Destination-flexible contracts accounted for half of the volumes contracted in 2022
Volume of contracts concluded in each year, split by contractual element, 2018-2023

IEA. CC BY 4.0.

PAGE | 54

IEA. CC BY 4.0.

Note: 2023 represents volumes signed by the end of June 2023. Destination flexibility is only for indicative purposes, assumed in the absence of a clear source of information.
Source: IEA analysis based on ICIS (2023), ICIS LNG Edge.

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Portfolio players: Key enablers of market flexibility and liquidity
Portfolio players have an important role in meeting buyers’ growing
need for flexibility in volume and destination. They procure a mix of
LNG supplies from various origins and resell to customers

the first half of 2023. This might be reflective of their preference
under current market conditions to sell their LNG volumes on the
spot market rather to sign term contracts.

according to their requirements via term and spot contracts.

The portfolio players’ contracted ratio – sales offtake as apercentage of purchase obligations, a metric of relative exposure tocertain types of market risk – declined to 52% in 2022 from 71% in2017. This means that the share of their purchase obligations notcovered by term sale contracts – or their net open position –increased from 29% to 48% between 2017 and 2022. Based on
existing contracts, their net open position is set to increase to an
average of close to 50% between 2023 and 2026. The growing net
position of portfolio players allows them to play a more active role inthe short-term market by increasing their spot sales and benefit

The role of portfolio players has grown significantly in recent years:
by volume, the share of their procurement contracts among all LNG
contracts in force rose from 26% in 2016 to over 40% in 2021 andstayed at similar levels in 2022. This increase was underpinned byparticularly strong contracting activity between 2016 and 2020,
when portfolio players accounted for 34% of the total purchase
contracts signed. Their share declined to 9% in 2021, before
rebounding to 38% of the total offtake agreements concluded in
2022. The average length of new purchase contracts concluded by
portfolio players increased from 5 years in 2017 to over 15 years in
2022. The share of large contracts (more than 4 bcm/yr) rose from
30% in 2018 to account for over 50% concluded by portfolio players
in 2022.

from the arbitrage opportunities arising from regional pricedifferentials.

The volume of sale contracts signed by portfolio players fell to
18 bcm/yr 2021 and below 10 bcm/yr in 2022 – a sharp decline fromthe 22 bcm/yr average between 2016 and 2020. Consequently, theproportion of sale contracts signed by portfolio players has fallenfrom 50% of total volumes contracted in 2017 to just 14% in 2022.
Portfolio players remained largely absent from new sale contracts in

PAGE | 55

IEA. CC BY 4.0.

Portfolio players played a crucial role in supplying flexible LNG to
the European Union amid the steep fall in Russian piped supplies
from the beginning of the 2021/22 heating season. Preliminary
shipping data indicate that portfolio players accounted for aroundhalf of incremental LNG supply into the European Union in 2022.
The supply flexibility they provide is expected to remain a key
contributor to gas supply security amid the energy crisis triggered
by Russia’s invasion of Ukraine.

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Portfolio players’ net open position is set to widen further over the medium term
LNG portfolio players’ contractual position and contracted ratio, 2018-2026

IEA. CC BY 4.0.

PAGE | 56

IEA. CC BY 4.0.

Note: This graph represents the volumes signed by the end of June 2023.
Source: IEA analysis based on ICIS (2023), ICIS LNG Edge.

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Contracted volumes are set to increase marginally over the medium term
Based on firm contracts, the volume of total active contracts(including portfolio contracts) is expected to increase by about 10%
between 2022 and 2026. This represents a marked slowdown

by around 70% between 2022 and 2026, solidifying the country’s
position as the largest holder of firm import contracts. In contrast,
contracted volumes going to traditional Asian buyers, including

compared with the 2017-2021 period, when contracted volumes
surged by close to 40%. This slower increase in active contracts isreflective of lower LNG liquefaction capacity additions over the2022-2025 period and Qatar’s strategy of developing new

Japan and Korea, are decreasing gradually. Europe’s LNG importcontracts are set to decline by over 20% by 2026 compared with
their 2022 levels, leaving the region at a greater exposure to spot
market dynamics.

liquefaction capacity without securing long-term contracts inadvance.

to decline by 17%, 7% and 92% respectively upon expiry.
Consequently, the share of the North America in total active
contracts is set to increase from 18% in 2022 to 26% by 2026,
making it the largest source of active contracts ahead of the

Despite the recent increase in new destination-fixed contracts, theshare of destination-flexible volumes in primary 2 LNG export
contracts is set to rise from 34% in 2016 to 58% by 2026 as older
destination-fixed contracts expire. The growing share of destinationfree contracts, together with uncontracted capacity, is expected tofurther increase the flexibility and liquidity of the global LNG market
over the medium term. Nevertheless, in the current market context,
where there is increasingly strong competition for LNG between
Europe and Asia, it is possible that destination-fixed contracts willcontinue to gain traction. If sustained, this trend could weigh on the

Middle East and the Asia Pacific region.

evolving liquidity and flexibility of the global LNG market.

On the export side, North America accounts for the bulk ofadditional active contracts, with its volumes increasing by 60%
between 2022 and 2026. In contrast, active LNG contracts sourced
from Africa, the Middle East and Central and South America are set

On the import side, the Asia Pacific region’s share remains broadly
stable to 2026, accounting for more than half of import contracts.
Notably, China’s LNG import contract volumes are set to increase

Sourced directly from export project owners, as opposed to secondary volumes sold by portfolio
players.
PAGE | 57

IEA. CC BY 4.0.

2

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

North America is set to become the world’s largest source of active LNG export contracts
Total active LNG contracts, 2018-2026

IEA. CC BY 4.0.

PAGE | 58

IEA. CC BY 4.0.

Source: IEA analysis based on ICIS (2023), ICIS LNG Edge.

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Destination-flexible contracts and uncontracted capacity expand over the medium term
LNG supply capacity by destination flexibility (excluding portfolio contracts), 2018-2026

IEA. CC BY 4.0.

PAGE | 59

IEA. CC BY 4.0.

Source: IEA analysis based on ICIS (2023), ICIS LNG Edge.

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Contract expiry creates new marketing opportunities in the medium term
Approximately 150 bcm of active LNG contracts are set to expire
between 2023 and 2026, followed by an additional 120 bcm
between 2026 and 2030.

48 bcm) and Europe with a share of 24% (or 37 bcm). Nevertheless,new contracts (primarily with China) together with contract renewals
will keep the Asia Pacific region’s total active contracts slightly
above their 2022 levels to the end of 2026. In contrast, Europe’s
total active contracts are set to shrink by 22% between 2022 andOn the seller side, the Middle East and the Africa are expected toexperience the greatest contract turnover in the medium term. Of
the total volume of export contracts expiring by 2026, they accountfor 28% (over 40 bcm) and 25% (close to 40 bcm) respectively. The
Asia Pacific region has around 27 bcm of contracts expiring during
the same period. Contract renewals and newly signed contracts are
only partially offsetting the expiry of legacy contracts. Consequently,
the Middle East is expected to see its firm contracted volumes
decline by 7% (or 12 bcm) between 2023 and 2026, while Africa
sees a drop of 17% (or 14 bcm) over the same period. The Asia

2026.
The expiry of legacy contracts creates an opportunity for market
participants to align contract terms more closely with buyers’ andsellers’ requirements in the years ahead, including on pricing
mechanisms and contracting period.
While LNG contracting has historically been dominated by oil
indexation, the adoption of more flexible contractual approaches,such as gas-to-gas indexation, hybrid formulae and hub pricing, hascontinued to gain ground in recent years. Based on available
information, it is estimated that the share of oil-indexed LNG export
contracts fell from over 71% in 2016 to 59% in 2022. This has been

Pacific region’s total active contracts are set to decline by 3% (or4 bcm) by 2026. Contracts with multiple sources fall by 20 bcm
between 2023 and 2026, but new contracts from portfolio players
are exceeding the expired contract volumes to result in a net

largely supported by the expansion of LNG export capacity in the
United States, with most of the supply contracts indexed to Henry
Hub. Based on the firm LNG export contracts in place, the share ofgas-to-gas indexation is set to increase from 41% in 2022 to closeincrease of 4 bcm over the 2022 level.
On the buyer side, the Asia Pacific region, which is the largest
holder of contracted purchase volumes, is expected to account foralmost 40% (close to 60 bcm) of expired contracts by 2026,
followed by multiple destination contracts with a share of 33% (orPAGE | 60

IEA. CC BY 4.0.

to 45% by 2026.

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Around 150 bcm of LNG contracts are set to expire by 2026 and over 250 bcm by 2030
Expiring export volumes under active LNG contracts,
2023-2030

Expiring import volumes under active LNG contracts,
2023-2030

IEA. CC BY 4.0.

PAGE | 61

IEA. All rights reserved.

Source: IEA analysis based on ICIS (2023), ICIS LNG Edge.

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

On the export side, North America is driving growth in the number of gas-to-gas indexed
contracts
LNG export contract volumes with oil-indexed and gas-to-gas pricing, by region and country, 2018-2026

IEA. CC BY 4.0.

PAGE | 62

IEA. All rights reserved.

Note: Contracts not linked to a specific origin or destination have been excluded from the analysis.
Source: IEA analysis based on ICIS (2023), ICIS LNG Edge.

LNG contracting and flexibility update

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Oil-linked pricing remains dominant in import contracts
LNG import contract volumes with oil-indexed and gas-to-gas pricing, by region and country, 2018-2026

IEA. CC BY 4.0.

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IEA. All rights reserved.

Note: Contracts not linked to a specific origin or destination have been excluded from the analysis.
Source: IEA analysis based on ICIS (2023), ICIS LNG Edge.

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Spotlight on natural gas storage

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IEA. All rights reserved.

Spotlight on natural gas storage

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Spotlight on natural gas storage

The 2022 gas supply shock put natural gas storage in the spotlight
The global energy crisis triggered by Russia’s invasion of Ukraine

The European Union adopted a new Gas Storage Regulation at
the end of June 2022 with a target storage fill level of 80% of
capacity before the winter of 2022/23, and 90% ahead of all
following winter periods. Singapore introduced a standby LNG
facility at the end of 2021 and in June 2022 the Energy Market
Authority extended it until 31 March 2023 to address the risk of gas
supply disruptions. In Australia the East Coast Gas System
Framework was implemented in May 2023 in response to thesignificant challenges experienced across east coast gas markets.

put the spotlight on natural gas storage and its regulation. Natural
gas storage plays a key role in meeting seasonal demand swingsand ensuring gas supply adequacy in markets with cold andtemperate climates. For instance, storage withdrawals met over
40% of EU gas demand during the coldest winter days in early
December 2022 and late January 2023. In addition, the short-termdeliverability provided by fast-cycling storage sites (such as salt
and rock caverns) is crucial to meet the fluctuating needs of thepower sector through the year, especially in markets where coalfired generation is being phased out and reliance on gas-fired
power plants (and hence on natural gas) is increasing.

In Japan, METI is due to launch the Strategic Buffer LNG ahead of
the 2023/24 winter.
In an increasingly globalised gas market, storage regulations canhave extra-regional implications. This calls for closer international
dialogue and improved transparency on storage regulations. The
International Energy Agency carried out a survey on natural gas
storage and its evolving regulatory frameworks across the membersof the Task Force on Gas and Clean Fuels Market Monitoring and
Supply and Security. The task force provides a platform for dataand information exchange among its members to further enhancetransparency on natural gas markets. Over 20 countries andentities, representing 70% of global gas storage capacity(underground and LNG storage combined), responded to the survey
on natural gas storage. A summary of the survey is provided in the

While storage sites are not the only providers of gas supply
flexibility, practical experience shows that they are typically themost reactive in instances of supply and demand shocks.
Bringing additional volumes of LNG to the market usually takes atleast several days; piped imports can be ramped up more quickly,
but there is usually a limit in volumetric terms. In contrast, storagesites are typically located close to demand centres and hence arereadily available to meet additional demand or to make up for lost
supplies. Storage can therefore provide a significant security
buffer to the gas and wider energy system.
Since Russia’s invasion of Ukraine, more stringent storage
regulations have been adopted across key natural gas markets.
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IEA. All rights reserved.

annex to this chapter.

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Spotlight on natural gas storage

Key natural gas storage policies and regulations initiated since February 2022

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IEA. CC BY 4.0.

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Spotlight on natural gas storage

Global natural gas and LNG storage capacity is set to expand by 10% in the next five years
Global natural gas and LNG storage capacity in import markets

capacity of UGS Strachocina is due to increase from 0.36 bcm tois expected to expand by 10% (or 45 bcm) during the 2023-2028
period, largely supported by projects in China, Europe and Eurasia.
Underground gas storage (UGS) capacity is set to grow by over
35 bcm, with porous reservoirs (aquifers and depleted fields)
accounting for more than 75% of total UGS capacity additions. LNG
storage capacity associated with regasification terminals is
expected to increase by close to 10 bcm over the forecast period.

0.46 bcm from the start of the 2023/24 winter season. In addition,
UGS Wierzchowice is set to be expanded from 1.3 bcm to 2.1 bcm
by 2025. In Bulgaria the working capacity of the Chiren storage site
is set to almost double from the current 0.55 bcm to 1 bcm by 2024.
In Romania the Bilciuresti storage site will be enhanced, increasing
its storage capacity from 1.31 bcm to 1.42 bcm and its daily
withdrawal capacity from 14 mcm/d up to 20 mcm/d by 2027. In the
United Kingdom the Rough gas storage facility was reopened
ahead of the 2022/23 heating season with a capacity of 0.85 bcm,
representing just 25% of its pre-closure capacity in 2017. The
working capacity of Rough is set to increase by 0.2-0.25 bcm aheadof the 2023/24 winter season. New FSRUs and the reopening of the
El Musel LNG terminal in Spain are set to add over 1 bcm of LNG
storage capacity during 2023-2025.

China is expected to lead gas and LNG storage development in
the medium term. In March 2022 China released its 14th Five-Year
Plan for a Modern Energy System, which sets a target to more thandouble the country’s gas and LNG storage capacity to reach 5560 bcm by 2025. At the end of 2022 China’s working gas capacity
was estimated to be 18 bcm, accounting for just 5% of the country’s
annual consumption, well below the level in mature markets. Basedon projects under development, China could add 20 bcm of UGS
capacity in the coming years, accounting for more than half of

In Eurasia underground storage developments are driven by
Russia, with the country targeting an increase in its daily withdrawal
capacity from 0.84 bcm in 2022/23 to 1 bcm. Storage additions are
expected to be limited in other regions, with projects being
developed in Australia, Brazil and Iran. LNG storage capacity
additions outside China and Europe are expected to be driven by
Korea, emerging markets in Asia, and Kuwait (in association with

the increase globally. In addition, China has around 7 bcm of LNG
storage capacity, with 5 bcm currently under construction.
Europe’s UGS capacity is set to increase over the forecast
period, largely driven by Türkiye. The Silviri storage site was
expanded from 3.2 bcm to 4.6 bcm by the end of 2022 and theTuz Gölü (salt cavern) storage facility is set to increase its working
capacity from 1.2 bcm to 5.4 bcm by the end of 2023. In Poland the
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IEA. All rights reserved.

the giant Al-Zour LNG import terminal).

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Spotlight on natural gas storage

China alone is expected to account for half of UGS capacity additions by 2028
Expected UGS capacity additions by type,2022-2028

Expected UGS capacity additions in key gas markets,
2022-2028

bcm

460

450

440

430

420

410

Salt caverns

2022

China

EuropeEurasia

Other
regions

Porous reservoirs

2028
IEA. CC BY 4.0.

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Sources: IEA analysis based on various company and news reports.

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Spotlight on natural gas storage

The European Union and its member states introduced mandatory fill targets in 2022
The European Union has just over 100 bcm of UGS capacity,

can take effective measures to avoid security of gas supply
problems. The regulation allows member states to partially meet thestorage targets by counting stocks of LNG or alternative fuels. In
member states with very large storage capacity compared to theirdomestic gas consumption, the filling obligation for UGS stocks islimited to a volume corresponding to 35% of the average annual
gas consumption in that member state over the past five years.
Member states that do not have storage facilities on theirterritory should store 15% of their annual domestic gas
consumption in stocks located in other member states and thus
ensure they have access to them. This mechanism strengthens the
security of their gas supply while sharing the financial burden.

accounting for 25% of the bloc’s natural gas consumption in 2021.
In addition, it has approximately 5 bcm of LNG storage capacity.
Storage plays a key role in meeting EU member states’ seasonal
swing in gas demand and ensuring gas supply security during thewinter season.
In the aftermath of Russia’s invasion of Ukraine, the new EU Gas
Storage Regulation was urgently developed and entered into force
on 1 July 2022. The regulation provided that UGS on member
states’ territory must be filled to at least 80% capacity before thewinter of 2022/23 and to 90% before subsequent winter periods.
The regulation turned out to be key in achieving a 95% fill level by
1 November 2022.

The regulation also provides for compulsory certification of all
UGS site operators by the authorities of the member statesconcerned. The aim of this certification is to avoid the potential riskof external influence on critical storage infrastructure, which could
jeopardise the security of the European Union’s energy supply andother essential security interests. A fast-track certification procedure
is applied to storage sites with a capacity above 3.5 TWh that werefilled at levels below the EU average in 2020 and 2021.

Each year as of 2023 member states with UGS facilities submit to
the European Commission a so-called “filling trajectory” withintermediate targets. The Commission then analyses the situation
and adopts an Implementing Regulation laying down theintermediate storage filing targets that member states need to meetin order to reach the 90% storage target. The filling trajectories
are subject to a margin of five percentage points and are monitoredby the national authorities, while member states are free to set ahigher filling target. If there is substantial and sustained deviationfrom the filling trajectory or from the filling target, the Commission

Storage capacity filling obligations will come to an end on

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IEA. All rights reserved.

31 December 2025, but operator certification obligations willcontinue to apply beyond that date.

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Spotlight on natural gas storage

The EU’s new storage regulation sets a UGS fill target level of 90% by 1 November% of working storage capacity

Indicative filling trajectory targets in the European Union after 2022
100%

80%

60%

40%

20%

0%

01-Feb01-Mar01-Apr01-May01-Jun01-Jul

01-Aug01-Sep01-Oct01-Nov
IEA. CC BY 4.0.

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IEA. All rights reserved.

Source: IEA analysis based on European Commission (2022), Document 52022PC0135.

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Spotlight on natural gas storage

Japan is set to introduce the Strategic Buffer LNG ahead of the 2023/24 winter season
Japan has no large-scale UGS facilities due to the particulardemand is high. In addition, regular monitoring of LNG inventory

topography of the country. The country has approximately 190 LNG
storage tanks, with a combined nominal tank capacity of around
9.6 million tonnes (or 13 bcm). It should be noted, however, that theentire capacity of LNG tanks cannot be used for storage due tophysical constraints and other factors. Hence, the storage capacity
available to the market is somewhat lower than the declared
nameplate capacity. Power and gas utilities, which are the main
LNG users, hold their own commercial inventories equal tolevels held by power utilities is conducted in accordance withguidelines prepared by the government.
Japan has designated natural gas as a critical product that requiresa stable supply under the Economic Security Promotion Act thatwas enacted in 2022. Under this new law, METI is to launch theStrategic Buffer LNG (SBL) ahead of the 2023/24 winter season.
Under this system, METI will designate private operators with high
LNG procurement capacity as companies authorised to handle SBL
operations. In the event of a contingency that would hinder LNG
supply, the government will instruct the designated companies tosell their LNG cargoes to utilities in Japan facing the risk of supply
disruption. The government will compensate the certified operator
for any losses caused by the instructed trade.

approximately 10 days to 2 weeks of demand.
Considering that LNG can be stored only for a limited time (due tothe ageing of LNG), 3 Japan follows a strategy of securing “reserves”
and “buffers” not only through physical storage, but also througha number of other mechanisms, relying on the flexibility options
available along the LNG value chain.

Furthermore, Japan has secured substantial LNG reserves by using
public finance to acquire interests in overseas projects. Japanconsiders that the use of public finance to acquire LNG concessions

In response to the natural gas crisis unfolding in 2022, Japanreinforced its policies relating to gas supply security. In thiscontext, a public–private liaison conference was held last year to
discuss LNG procurement, develop a framework for interoperator
flexibility, and require LNG users to systematically and steadily
secure inventories, especially during the winter months whenand secure LNG under long-term contracts with flexible destinations
can be a beneficial mechanism for countries that, like Japan, are
not rich in natural resources, have low energy self-sufficiency rates
and do not have oil majors.

Due to the boil-off of lighter molecules (methane and nitrogen), the composition of stored LNG
changes over time. The phenomenon is referred as the ageing (or weathering) of LNG.
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IEA. All rights reserved.

3

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Spotlight on natural gas storage

The Strategic Buffer LNG provides a new LNG security framework with close co-operation fromthe private sector
Simplified scheme of the functioning of Japan’s SBL

IEA. CC BY 4.0.

PAGE | 72

IEA. All rights reserved.

Note: JOGMEC = Japan Oil, Gas and Metals National Corporation.

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Spotlight on natural gas storage

Source: IEA analysis based on METI.

Australia implemented the East Coast Gas System Framework in May 2023
Australia has approximately 280 PJ (or 7.5 bcm) of natural gas
storage. Over 95% of the country’s storage capacity is in UGS sites,

more secure, resilient and flexible gas market on the east coast.
They include:with over 70% of it located in the east coast market.



The country’s storage capacity is expected to increase in the
coming years. The Iona UGS site operator, Lochard Energy, has
informed the Australian Energy Market Operator (AEMO) of aplanned upgrade to Iona’s storage capacity prior to the 2024
southern winter. This upgrade (known as the Heytesbury
Underground Storage Project) will increase the working capacity of
the Iona storage site from 23.5 PJ (0.6 bcm) to 28 PJ (0.7 bcm)
and its withdrawal capacity from 520 TJ/d (13 mcm/d) to 570 TJ/d
(14 mcm/d). In addition, the Golden Beach Gas Production andStorage project (offshore site east of Melbourne) is currently being
considered. Subject to FID, the project is aiming to supply gas into
the domestic market from H1 2025. The storage phase of the
project is planned to commence in 2026, with a capacity of 12.5 PJ(0.3 bcm) of gas and with an initial withdrawal capacity of 250 TJ/d

The East Coast Gas System Framework, extending
AEMO’s power to better manage gas supply adequacy andreliability risks ahead of the 2023 southern hemisphere
winter.
An agreement to examine options to implement a thirdparty access regime for storage infrastructure.

The East Coast Gas System Framework, implemented in May
2023, provides AEMO with the power to exercise direction or
trading functions to manage supply adequacy and reliability risks.
The exercise of these powers may include, for example, directing astorage service provider to inject or withdraw gas from a storage
facility, or for AEMO to purchase services provided by a storage
provider. These powers are intended to be deployed as a last resort
and AEMO’s ability to exercise these powers is constrained in a
number of ways – for example, prior to issuing a direction, AEMO
must generally provide industry with time to mitigate risk.

(6 mcm/d).
Considering the significant challenges experienced acrossAustralia’s east coast gas markets during the 2022 southernhemisphere winter, Australian federal, state and territory energy
ministers agreed to take a range of actions aimed at supporting a

In addition, under new rules implemented in December 2022,
AEMO is required to contract any uncontracted capacity in theDandenong LNG storage facility (0.015 bcm) ahead of winterPAGE | 73

IEA. All rights reserved.

through the period 2023-2025.

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Spotlight on natural gas storage

Storage is a key contributor to supply flexibility during the southern hemisphere winterbcm

Inventory levels at the Iona UGS facility, 2019-2023

0.6

0.4

0.2

0.0

IEA. CC BY 4.0.

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IEA. All rights reserved.

Source: IEA analysis based on AEMO (2023), Gas Bulletin Board.

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Spotlight on natural gas storage

Annex: Natural gas storage capacity and regulatory frameworks in selected markets*
Total storage
capacity(bcm)

Austria

9 bcm
(UGS)

Australia

7 bcm (UGS)
0.06 bcm (LNG)

Strategic
storage(bcm)

1.8 bcm(UGS)

New
capacity(bcm)

Regulatory framework-

System operators are required to connect all UGS facilities within the country to the Austrian gas
network and offer gas storage capacity to the market, with non-compliance resulting in the loss of
the right to operate the facility. The legal basis for the Austrian strategic gas reserve (SGR) was
implemented in April 2022. The entity in charge of the procurement of the SGR is the gas
distribution area manager. The purchase (two tenders in 2022) was financed from the federal
budget. The SGR can only be released by ordinance of the energy minister to tackle an imminent orexisting disruption of energy supply or in case of an obligation to provide solidarity pursuant toArt. 13 of Regulation (EU) 2017/1938.

0.11 bcm(UGS by
2024)

The East Coast Gas System Framework, implemented in May 2023, gives AEMO the authority todirect gas storage providers and purchase their services to ensure supply adequacy. For further
details please refer to the Australia section of this chapter.

Belgium

0.7 bcm (UGS)
0.3 bcm (LNG)--

Canada27 bcm (UGS)
0.32 bcm (LNG)

-

-

Czech
Republic

4 bcm
(UGS)

0.23 bcm(UGS)-

Gas storage regulation is based on non-discriminatory third-party access, transparency and a
regulated tariff. In the course of 2022, regulated documents were amended to account for filling
targets and trajectories, in line with the provisions of security of supply regulation (EU) 2017/1938.
Belgian gas law modification to allow sales below the regulated tariff was agreed upon before thestart of the 2022 gas crisis.
Natural gas storage is regulated by provincial governments, which have largely chosen toderegulate their gas markets to enable gas market participants to acquire, sell and store gas inways that best suit their commercial needs.
Canada’s federal government does not regulate natural gas storage. There are no government
support mechanisms to ensure natural gas storage fill levels in Canada. Canada’s integrated andliquid gas markets have served to adequately fill gas storage before each winter heating season.
Booking of storage capacity is conducted through electronic auctions, with operators publishingregular auctions on their electronic booking platforms. Since 2022 the Czech Republic has adopted
new regulations and rules, i.e. removal of transmission tariffs for entry/exit at interconnection points
to gas storage sites, and an obligation on gas traders to use booked gas storage capacity (use-it-orlose-it rule) accompanied by the right of a gas trader to withdraw from storage contracts in force
within two months of the implementation of the rule. The country also introduced new reporting
obligations for unused storage capacity and compulsory gas withdrawal during extraordinary gas
emergencies, while the core of the gas storage regulation remains unchanged. In 2022 thegovernment subsidised gas stocks through premiums paid to gas traders for storing gas in their
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CountryGlobal Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Country

Total storage
capacity(bcm)

Spotlight on natural gas storage

Strategic
storage(bcm)

New
capacity(bcm)

Regulatory framework
facilities, and transmission tariff discounts at interconnection points to gas storage are still in effectin 2023. No additional support mechanisms were introduced.

0.9 bcm (UGS)

FinlandFranceGermany--

0.14 bcm (LNG)--

12 bcm (UGS)
0.75 bcm (LNG)--

22.5 bcm (UGS)
0.27 bcm (LNG)-

2.4 bcm(UGS withuncertain
timeline)
0.3 bcm(LNG by2024)

Since 2022 the German Energy Act has set mandatory storage level requirements (90% by 1 Nov).
Strategic storage-based options and Trading Hub Europe ensure the market-based filling of storage
facilities. The government stimulates the market-based filling of storage facilities by tendering
strategic storage-based options. Furthermore, storage capacity is taken from non-compliant storage
users (that do not fill their capacity as required) and the injection of gas into this storage is ensure
by the market area manager Trading Hub Europe.

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IEA. All rights reserved.

Denmark

The Danish gas network operator Energinet is in charge of buying emergency gas and meeting filling
requirements. It buys emergency gas to ensure supplies to customers in case of a declaration of an
emergency. Furthermore, Energinet buys filling requirements from actors who have bought capacity
in Danish storage facilities. Under this mechanism, Energinet purchases a service from commercial
gas companies to hold a certain amount in storage. Energinet together with the authorities can decide
when to release this gas from storage (when encountering severe consumer supply issues).
The government imposes stockholding obligations on companies. Companies must store annuallyby 1 April the amount of natural gas or LNG that corresponds to one-quarter of the amount of theirusage, retailing or reselling of natural gas or LNG during the previous calendar year. As part of theimplementation of the EU Gas Storage Regulation, the legislation on compulsory storage wastemporarily amended. During the winters of 2022/23-2024/25, companies that 1) use natural gas
from a usage point connected to transmission network; or 2) retail natural gas to end users via thetransmission network, are obliged to store gas so that the requirements of the regulation are met ata national level.
In 2018 the government implemented a regulation on essential UGS facilities to enable the build-up
of gas stocks before the beginning of winter. Essential storage sites are regulated by the Frenchenergy regulatory agency (CRE). Essential storage capacity is sold to gas suppliers through an
auction system in which all gas suppliers are allowed to participate. The cost of essential gas
storage facilities are partially covered by transmission tariffs if auction revenues are insufficient. A
new mechanism was introduced in 2022 to secure the filling of essential storage sites, even in theevent of the collapse of a major gas supplier. The authorities define a minimal filling trajectory. In
the case that storage fill lags the defined minimal filling trajectory during the filling season, storage
operators are responsible for buying gas to constitute the missing stocks. The associated costs arecovered by the government budget. This new mechanism was not activated in 2022.

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Total storage
capacity(bcm)

Strategic
storage(bcm)

New
capacity(bcm)

Hungary

6.5 bcm(UGS)

1.9 bcm-Italy

17.5 bcm(UGS)
0.36 bcm (LNG)

4.2 bcm(UGS)

0.2 bcm(LNG)(by 2024)

Japan< 13 bcm (LNG)

-

-

Korea

7.8 bcm (LNG)-

2.5 bcm(LNG)

Netherlands

13 bcm (UGS)
0.4 bcm (LNG)

-

-

New
Zealand

0.2 bcm (UGS)--

Regulatory framework
The Act on Gas Supply sets an obligation on wholesale gas suppliers responsible for the supply of
residential consumers to store a certain amount of their customers’ consumption. For instances ofgas supply disruption, there is also a regulation requiring the establishment, maintenance andutilisation of strategic gas stocks, which are held by a Central Stockholding Entity (HUSA).
UGS on Hungary’s territory must be filled to at least 80% of its capacity before the winter of 2022/23
and to 90% before the following winter periods, with specific intermediate targets for 2022. The
filling obligation for underground stocks is limited to a volume corresponding to 35% of the averageannual gas consumption over the last five years (about 3.1 bcm).
UGS operators’ revenues are regulated by the National Regulatory Authority for Energy (ARERA)
and the capacity allocation mechanism is decided by the Ministry of Environment and Energy
Security, which issues a decree every year. Third-party access is allowed and each operator has torefer to the Storage Code (supervised by ARERA), which regulates all storage activities. In 2022 thegovernment introduced temporary measures to guarantee 90% inventory levels by the start of the2022/23 heating season. This included “contracts for difference” and introduced the designation of a“last resort storage filler” (GSE).
Japan has designated natural gas as a critical product that requires a stable supply under the
Economic Security Promotion Act. Under this new law the Strategic Buffer LNG will be launchedahead of the 2023/24 winter. For further details please refer to the Japan section of this chapter.
Businesses importing LNG for self-consumption are required to possess stocks corresponding to
30 days of planned natural gas consumption, while LNG wholesalers are required to possess astockpile of LNG based on the average LNG consumption of the corresponding seasons in thetwo previous years, equivalent to nine days of consumption. No changes have been introduced
since the 2022 gas crisis.
The regime for negotiated third-party access is implemented through the Dutch Gas Act. Measures
regarding safe operation of storage sites and permitting for gas storage sites are implemented
through the Dutch Mining Act. A support scheme compensates, if necessary, any negative
summer–winter spread. No subsidy had to be paid in 2022. The state-owned company Energie
Beheer Nederland (EBN) has the task of filling the gas storage site at Bergermeer with a certain
amount of gas in the instance that this is not done by market participants.
Gas storage regulation is not separated from the regulation of other subsurface and production
assets. Gas storage is based on commercial arrangements between gas industry participants.

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IEA. All rights reserved.

Country

Spotlight on natural gas storage

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

PolandPortugal

Spain

Total storage
capacity(bcm)

Strategic
storage(bcm)

0.1 bcm(UGS by2024)
0.1 bcm(LNG by2024)
0.8 bcm(UGS by2025)

3.3 bcm (UGS)
0.18 bcm (LNG)

0.35 bcm (UGS)
0.23 bcm (LNG)

3.1 bcm (UGS)
1.85 (LNG)

New
capacity(bcm)-

0.05 bcm(UGS by2028)
0.05 bcm(UGS by2029)

0.17 bcm(LNG by2023)

Regulatory framework
Mandatory stocks are maintained by the Government Agency for Strategic Reserves, by entities
trading natural gas with foreign countries and entities importing natural gas into Poland for their own
needs. During the declaration of a state of emergency, the gas system operator, in co-operation withthe entities obliged to maintain mandatory stocks, are required to take measures to ensure the proper
functioning of the gas system. The transmission system operator releases mandatory stocks in thequantities necessary to balance the gas system. The volume of the mandatory stock is 1.34 bcm. In
addition, the transmission system operator purchases balancing gas stocks, which are stored in UGS
facilities. The reserves held for storage purposes are not to be used for system balancing purpose in
non-emergency situations.
Decree-Law No. 62/2020 of 28 August 2020 established the organisation and operation of thenational gas system. It places the obligation on suppliers in the market regime and last-resort
suppliers to maintain security reserves to guarantee supply to their customers. Ministerial OrderNo. 59/2022 of 28 January 2022 defines the minimum security reserves of all non-interruptible
consumption. It establishes that these reserves must correspond to 45 days of average annual
consumption of protected customers and 16 days of consumption equivalent to the maximum capacityof non-interruptible CCGT. It also establishes the obligation to create and maintain an additional
reserve during the period from 1 October to 31 March of the following year (maximum 0.06 bcm).
All suppliers with natural gas end users must maintain a certain level of security stocks in UGS,
proportional to the amount of natural gas each supplier sells to its respective end users, andexpressed in equivalent days of demand. Each supplier must maintain a total of 27.5 days ofequivalent demand split between: 1) 10 days of strategic stocks; 2) 10 days of minimum operational
stock of the system; and 3) 7.5 days of minimum operational stock of the user.
In addition, from 1 November to 31 March the "Winter Action Plan" applies, which requires shippers
to increase their LNG storage to reach staggered filling milestones with a maximum on 1 January
reaching a target of 5.5 days of their contracted capacity at the entry points to the transmission
system.
Suppliers who are obliged to maintain minimum security stocks do not have to bid in the auction forthe sale of storage capacity, but rather it is assigned to them directly. Therefore, they only have to
pay the storage toll. From 1 April 2022 to 31 March 2024 contracted storage capacity in excess of
20 days of capacity booked at the entry points to the transmission system will not pay the storage fee(only injection and withdrawal tariffs). The public budget will transfer EUR 23 million/year to the gas
system as compensation.

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IEA. All rights reserved.

Country

Spotlight on natural gas storage

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Country

Total storage
capacity(bcm)

Spotlight on natural gas storage

Strategic
storage(bcm)

New
capacity(bcm)

Regulatory framework
There is no strategic gas storage or regulatory framework apart from EU legislation on securing
supply to protected customers. There will from June 2023 be a requirement that the gas operators
responsible for system balancing also take on responsibility for ensuring sufficient gas storage
filling, should the gas transmission system operator demand it. The gas system operators
responsible for balancing should be able to have their costs for obligatory filling reimbursed throughnetwork tariffs.

Sweden0.01 bcm (UGS)
0.03 bcm (LNG)

Switzerland

-

-

-

Türkiye

5.8 bcm (UGS)
0.4 bcm (LNG)-

4.8 bcm(UGS by2023)

UnitedKingdom

2.3 bcm (UGS)
0.7 bcm (LNG)--

UnitedStates130 bcm (UGS)
2.5 bcm (LNG)*--

The gas sector must guarantee that 15% of annual average Swiss gas consumption is stored inavailable gas storage (in the European Union) by 1 November 2023.
Under the Natural Gas Market Law, the Energy Market Regulatory Authority (EMRA) determines thelevel of gas that importers are required to store relative to the amount of their annually imported
gas, up to 20% of the total.
The energy regulator in Great Britain, Ofgem, is responsible for ensuring compliance with therequirements of the Third Internal Energy Package, as transposed into domestic legislation, relating
to gas storage. This includes ensuring compliance with third-party access arrangements andunbundling. There is no strategic gas storage in the United Kingdom nor any government support
mechanisms available for gas storage filling.
The US government neither holds strategic reserves of natural gas nor places a minimum natural
gas stockholding obligation on industry.

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IEA. All rights reserved.

* The information provided in this annex is based on the survey carried out by the International Energy Agency among members of the Task Force on Gas and Clean Fuels Market
Monitoring and Supply and Security.

System integration of low-emission gases

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

PAGE | 80

IEA. All rights reserved.

System integration of low-emission gases

System integration of low-emission gases

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Low-emission gases play a key role in the pathways to net zero emissions by 2050
The decarbonisation of gas and the broader energy system will
require the deployment and scale-up of low-emission gases.
Low-emission gas streams include biomethane, low-emission

availability of storage options and more complex linepack
management.
Existing natural gas infrastructure can play a key role in enabling
the more rapid and cost-effective deployment of low-emission gases

hydrogen, e-methane, and natural gas subject to carbon capture,utilisation and storage (CCUS) both at the production and at theend-use stage. In recognition of the growing interest of member,
association and non-member countries in low-carbon gases, thewhile facilitating their integration into the broader energy system.
In this section we focus on two key dimensions of the future
integration and application of low-emission gases:

IEA Secretariat developed a Low-Emission Gases Work
Programme (LEGWP) to provide regular market analysis, including
on the evolving network integration and supply flexibility of low-•

Large-scale storage: low-emission gas production facilities(biogas upgraders, steam methane reformer [SMR] plants
and electrolysers) have either flat or volatile supply patterns– especially when produced from variable renewables. This
limited operational flexibility necessitates the development
and use of large-scale storage facilities to enable lowemission gases to respond to seasonal demand swings andshort-term supply–demand fluctuations.

•

Maritime transport: international maritime transport isconsidered to be a hard-to-abate sector. Liquefied lowemission gases are widely acknowledged as likely to play a
key role in the decarbonisation of the shipping sector in themedium to long term. In addition, the existing LNG carrier

emission gases.
As highlighted in the IEA’s Global Gas Security Review 2021
edition, the large-scale integration of low-carbon gases is expected
to transform existing gas systems in a number of ways:••

Gas supply chains become more complex andincreasingly decentralised, necessitating intimate integration
between distribution and transmission networks.
Gas quality displays greater diversity and variability,
raising issues related to the interoperability of adjacent gas
systems and the integration of methane and hydrogen
networks.

fleet could be repurposed to facilitate the transport of certainliquefied low-emission gases.

Gas supply flexibility is altered by the operational
characteristics of low-carbon production facilities, thePAGE | 81

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•

System integration of low-emission gases

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Low-emission gases naturally lead to a more complex gas system
Simplified scheme of existing
natural gas value chain

Simplified scheme of low-emission
gas value chains

IEA. CC BY 4.0.

PAGE | 82

IEA. All rights reserved.

Notes: SMR = steam methane reformer; SNG = synthetic natural gas or synthetic methane.

System integration of low-emission gases

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Underground storage plays a critical role in unleashing biomethane’s full potential
Biomethane production plants display limited daily variability
and seasonality as facilities typically operate close to nameplate
capacity through the year. The rather minor contribution of

In Europe almost 60% of biomethane plants are connected tothe distribution grid, while fewer than 20% feed directly into thetransmission system. In contrast, underground storage facilities are
typically connected to the high-pressure transmission system.
Reverse flows from the distribution grid to the transmission
network would allow low-carbon gases to access undergroundstorage facilities. Bidirectional compressor stations are key toenabling closer integration between distribution and transmission
systems. Currently Europe has 10 operational bidirectional
compressor station, with over 20 more under construction.

biomethane plants to meeting the variability in overall gas demandis well demonstrated in Denmark. While biomethane accounted for
33% of total gas demand in 2022, biomethane plants alone
contributed just 9% of the seasonal demand swing between
summer 2022 and winter 2022/23. Moreover, the cumulative
variability of daily biomethane production was less than 6% of theabsolute cumulative daily variability of gas demand in 2022,
indicating a proportionally lower contribution to the overallrequirement for gas supply flexibility.
The production flexibility of biomethane plants could be enhanced in
two ways: (1) incentivise investment in “buffer” capacity,although the relatively complex and rigid supply chains of raw
biogas could be a limitation; and (2) provide biomethane plants withgreater access to underground storage sites.
Biomethane is well-suited to being stored in underground facilities
due to its physical and chemical properties being almost identical tonatural gas. Nevertheless, the access of biomethane plants tounderground storage sites might be limited by: (1) insufficient
integration between the gas transmission and distribution systems;and (2) the oxygen content of biomethane.

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IEA. All rights reserved.

In contrast with natural gas, biomethane typically contains
oxygen (around 3 000 ppm), mainly as a consequence of thedesulphurisation process during its production. Initial research
indicates that this oxygen content could potentially negatively
impact the effectiveness of storage in porous reservoirs andeventually lead to the disruption of storage operations (due tosulphur precipitation). Given the unique features of eachunderground storage site, the permissible oxygen content needs tobe assessed on a case-by-case basis. The Danish Gas Technology
Centre found limited corrosion risk in salt caverns, while noting therisk of microbial contamination and higher corrosion risk in aquifers.
Oxygen removal units – at the biogas upgrader, on the gas grid orat the entrance to the storage facility – could improve theacceptance of biomethane at underground storage sites.

System integration of low-emission gases

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Biomethane production plants display limited short-term variability and seasonality

mcm/d

Daily natural gas demand and biomethane production in Denmark, October 2021-March 2023
14
12
10
8
6
4
2

Biomethane production

Mar-23

Feb-23Jan-23

Dec-22

Nov-22Oct-22

Sep-22Aug-22

Jul-22Jun-22

May-22

Apr-22Mar-22

Feb-22

Jan-22

Dec-21

Nov-21

Oct-21

Oct-210Natural gas demand
IEA. CC BY 4.0.

PAGE | 84

IEA. All rights reserved.

Source: IEA analysis based on Energinet (2023), Energi Data Service.

System integration of low-emission gases

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

The first open seasons for hydrogen storage were launched in Europe in 2023
Underground storage will be crucial for hydrogen to reach its
full potential as an energy carrier and respond to the evolving
flexibility requirements of a more complex energy system.

seasons are typically divided into binding and non-binding phases.
The binding phase is concluded through the conclusion of long-term
capacity contracts between the project developer and market
participants. The long-term capacity contract effectively functions as
a risk-sharing mechanism and ensures that the project developer’s
initial investment costs are recovered through the payment of tariffs
associated with the storage service provided. In France,

Considering that low-emission hydrogen production facilities (SMR
plants or electrolysers) have either flat or volatile supply patterns,
storage will be critical in responding to the short-term variability ofboth hydrogen supply and demand. In contrast with biomethane,pure low-emission hydrogen storage in underground storage
facilities will require either the repurposing of current assets or thedevelopment of new facilities suited to serving hydrogen.

Géométhane launched a non-binding open season from 1 February
to 15 March 2023 to assess interest in hydrogen storage in two salt
caverns (with a total capacity of 200 GWh) located in Manosque. No
results of this non-binding open season have been disclosed todate. In the Netherlands, HyStock held an open season from15 June to 14 July 2023, offering market participants the ability toreserve capacity in its A5 hydrogen salt cavern (216 GWh). The firstsalt cavern is expected to be commissioned in 2028.
Three additional hydrogen caverns could be developed soon after
2030, depending on market interest.

Hydrogen storage in salt caverns is a proven technology and has
been used by the petrochemical industry since the early 1970s. The
United Kingdom has one operational hydrogen salt cavern facility
with a capacity of 25 GWh, commissioned in 1972 on Teesside.
Based on public project announcements, over 4.5 TWh ofunderground hydrogen storage capacity could be developed inEurope by 2030 (translating into around 1.5 bcm in volumetricterms). However, none of these projects has yet reached FID, withmost of them either at the conceptual phase or undergoingfeasibility studies. Considering the long lead times of these projects,
immediate action needs to be taken on hydrogen storage, requiringa concentrated effort among key stakeholders and policy makers.

In contrast with salt caverns, there is no practical experience ofstoring pure hydrogen in porous formations. In April 2023 theUnderground Sun Storage 2030 project was launched in Austria todemonstrate the storage of pure hydrogen (~4.2 GWh) in a former
natural gas reservoir. Interdisciplinary technical-scientific

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IEA. All rights reserved.

investigations are to be carried out until 2025 to assess the initial
results of hydrogen storage in the porous formations.

In 2023 several open seasons have been launched to assessmarket participants’ interest in underground storage capacity. Open

System integration of low-emission gases

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

European hydrogen storage development will require stakeholders to make concentrated efforts
Underground hydrogen storage capacity development in Europe by 2030

2022

2030

0

500

1 000
Operational

1 500

2 000
Close to FID

2 500

3 000
Feasibility study

3 500

4 000

4 500
GWh

Concept stage
IEA. CC BY 4.0.

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IEA. All rights reserved.

Sources: IEA analysis based on project announcements.

System integration of low-emission gases

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Liquefied low-emission gases are expected to be central to decarbonising the maritime sector
International maritime transport is heavily dependent on emissionintensive oil derivatives (including very low sulphur oil, heavy fuel oil
and diesel). Oil products account for 99% of the total fuel consumed

Efficiency eXisting ship Index (EEXI) to determine their energy
efficiency, and their annual operational Carbon Intensity Indicator(CII) and associated CII rating. Carbon intensity links the GHG

in this sector today, and the industry is responsible for about 2% of
global energy-related CO2 emissions. It faces major decarbonisation
challenges. With large, heavy vessels carrying cargo over long
distances, it is both a hard-to-electrify and a hard-to-abate sector.
Current standard marine fuels are easy to handle and store, butemit climate and local air pollutants (including CO2, PM and NOx).
While scrubber systems and LNG could offer near-term reductions
in local pollutant emissions to meet increasingly stringent
regulations, it is widely recognised that other low-emission, nonfossil fuel-based fuels have a critical role to play in decarbonising
the shipping sector.

emissions to the amount of cargo carried over the distancetravelled. The CII rating threshold will become stricter over time andwill therefore determine the annual carbon reduction factor needed
to ensure compliance. Each vessel will receive a grade from A(good) to E (poor). Ships with a poor grade must put a corrective
action plan in place. The EEXI is based on the ship's specifications,
not on its actual operating performance. EEXI is a one-off look at
the technical or design efficiency of a vessel, while CII will requiredemonstrable reductions in operational carbon intensity.

The United Nations’ International Maritime Organization (IMO) is themain regulatory body of the shipping industry. The IMO has set atarget to reduce the carbon intensity of international shipping by
40% by 2030 and at least 50% by 2050 versus the 2008 levels. To
this end, it is crucial that the IMO's ongoing work towards the
adoption of a “well-to-wake” metric – which includes emissions
relating to every stage in a fuel’s life cycle, from production to final
consumption – is successfully completed, to accurately measure theimpact of fuels on climate and health. The IMO’s further regulatory
measures came into force in January 2023, with the introduction of
two ratings: ships are required to calculate their attained Energy

power limitation or shaft power limitation. The benefits of speed
reduction from an environmental point of view depend on several
elements, such as the size and type of vessel, the number of annual
round trips and the applicable carbon tax status. The impact of the
CII is expected in 2024, as in 2023 shipowners are consolidating
tracking data for each of their vessels, which will serve as the basis
for the first CII A–E rating.
In addition to this international regulatory framework, individual
countries may include targets for shipping in their national mitigationplans, and some regional initiatives have imposed more stringent
rules and regulations. For example, in a new climate plan and for
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IEA. All rights reserved.

One of the main short-term measures to comply with EEXI
regulations is to reduce speed and fuel consumption, using engine

System integration of low-emission gases

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

the first time ever, in 2024 the European Union will extend its
emissions trading system (ETS) to cover CO2 emissions from ships
and, from 2026, two other GHGs – methane (CH4) and nitrous oxide(N2O). In the same spirit, the IMO is discussing a carbon tax, therevenues from which could be used to subsidise technologies or
fuels to decarbonise the sector. All these regulations will have asignificant impact on the design and operation of all ships. Other
initiatives focus squarely on shipping fuel and aim to increase thedemand for renewable and low-carbon fuels. As part of the EU’s Fitfor-55 package, the FuelEU Maritime regulation promotes the use ofrenewable and low-carbon fuels on ships with a gross tonnage
above 5 000 travelling to, from or at berth in EU ports, by setting
requirements to gradually reduce the carbon intensity of marine
fuels. It starts with a 2% reduction by 2025 compared with 2020
levels, reaching up to an 80% reduction by 2050.

biomethane (LBG), low-emission hydrogen, methanol, ammonia
and liquefied e-methane (e-LNG).
Each of these fuels has its own advantages and challenges. With
low NOx, SOx and PM emissions, LNG as a marine fuel meets all
IMO and more stringent local emission regulations, is readily
available and uses proven technology. The use of LNG requires
specific engines with dedicated fuel management systems andgreater fuel storage space. LNG bunkering infrastructure isdeveloping rapidly at the world’s major hubs. As a result, LNG iscurrently the most popular alternative fuel choice. However,uncertainties exist over future LNG prices, and upstream methaneleaks and onboard methane slip are damaging to the environmental
footprint of LNG from a “well-to-wheel” perspective. As they arechemically the same, LNG can be blended with or completely
replaced by renewable LBG in the short term or by e-LNG(produced from low-emission hydrogen and captured carbon
dioxide) in the longer term. However, the availability of feedstock,
and resulting implications on cost, are of concern when it comes tomeeting expected demand in the marine sector.

To reduce carbon emissions and improve fuel efficiency, vesselowners and operators have several options, including:Operational optimisation.

•

Modernisation of vessels with energy-saving technology.

•

Switching to low-emission fuels.

Thanks to its air quality benefits, methanol is gaining momentum
because it meets current emission regulations. Moreover, it is easy
to handle (it can be stored at ambient temperature and pressure)and can be used in dual fuel 4 engines. Fossil methanol is produced

To reach these ambitious decarbonisation targets, a combination of
all these options will be needed. The following paragraphs focus on
the options provided by alternative marine fuels, including liquefied

4

from natural gas. “Green” methanol, either produced from biomass

Diesel/methanol or Residual Fuel Oil (RFO)/methanol.
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•

System integration of low-emission gases

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023(bio methanol) or from carbon dioxide and hydrogen produced fromrenewable electricity (e-methanol), is becoming increasingly
popular. Methanol nevertheless presents a few disadvantages,
including a low volumetric energy density (around 35-40% of LNG),

35% of the volumetric energy density of LNG. As liquid hydrogenrequires more space to store the fuel onboard, it is unsuitable forlong, transoceanic trips. Lastly, liquefaction is quite energy
intensive.

which has an impact on the storage system, and the absence, forthe time being, of a large-scale distribution network.
Other alternative fuels, such as low-emission ammonia produced
through the Haber-Bosch process and low-emission hydrogenproduced through electrolysis, SMR or gasification with CCS, areemerging as long-term solutions. They are attracting significant
investment into the development of technologies. Of all the options
listed, these are the only two fuels that have no direct CO2
emissions. Already produced and traded at scale, ammonia can beproduced from the catalytic reaction of N2 from air with H2 fromwater. However, the current Haber-Bosch production process ishighly energy intensive, ammonia has a low volumetric energy
density (around half that of LNG), and it is above all corrosive andtoxic. This has implications for onboard and port storage, monitoring(to ensure there are no lethal leaks) and bunkering. It also has an
impact on the ships’ layout (location of fuel tanks), and requires
double piping, among other measures. Potentially clean andabundant, hydrogen is notoriously difficult to store safely atsignificant quantities. The typical solution is to store the hydrogen ina liquid form at -253°C, achieved with a complicated refrigeration
system and highly sophisticated insulation. Liquid hydrogen has theworst volumetric energy density, after methanol and ammonia, with
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IEA. All rights reserved.

From the perspective of technological readiness, supply availability
and infrastructure, LNG seems to be the most pragmatic option
chosen by the industry to reduce emissions. However, theskyrocketing gas prices observed in 2022, security of supply andgrowing awareness about methane emissions along the whole
supply chain have made other solutions, such as liquid biofuels or
methanol, more attractive. Infrastructure for fuel availability at ports
is an urgent concern for the maritime industry. Bunkering
technologies exist for LNG and are therefore ready for LBG and, intime, for e-LNG. In contrast, there is no commercial bunkering
infrastructure for ammonia or hydrogen yet, although the Global
Maritime Forum recorded more than 50 ongoing ammonia
demonstration projects as of May 2023, as well as almost
50 hydrogen projects. The use of ammonia and hydrogen as amarine fuel would also require the development of a whole new fleetof specialised vessels. Improvements to safety are ongoing, as
seen recently on the world's very first liquid hydrogen transporter,
built by Kawasaki. The potential pathways to the initialdemonstration and commercialisation of ammonia and hydrogen are
already underway and could materialise before 2030.

System integration of low-emission gases

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

The future marine shipping market is based on multiple, more diversified fuels
Order book
Vessels on order by fuelWorld fleet,
Vessels in operation by fuelConventional
fuels +
Battery/Hybrid
99.4%

Conventional
fuels +
Battery/Hybrid
85%

937
1,304

184

526
769

91

156

130

27

22

LNG
LPG
MethanolHydrogen

IEA. CC BY 4.0.

PAGE | 90

IEA. All rights reserved.

Sources: IEA analysis based on DNV’s Alternative Fuels Insights for the shipping industry – AFI platform data as of 9 July 2023.
Disclaimer: The positions or views stated in such document are solely those of the author and do not necessarily represent the views of DNV and/or the third-party data owner.

System integration of low-emission gases

Global Gas Security Review 2023
Including the Gas Market Report, Q3-2023

The number of ships running on alternative fuels on order for delivery by 2028 is rising sharply

Number of vessels

Growth in the use of alternative fuels in the world fleet, 2003-2028
1 500

1 000

500

-

2003

2008

2013
LNG

LPG

2018
Methanol

2023

2028

Hydrogen
IEA. CC BY 4.0.

Note: LNG carriers are not included in the LNG figures.
Sources: IEA analysis based on DNV’s Alternative Fuels Insights for the shipping industry – AFI platform data as of 9 July 2023.

PAGE | 91

IEA. All rights reserved.

Disclaimer: The positions or views stated in such document are solely those of the author and do not necessarily represent the views of DNV and/or the third-party data owner.

AnnexGlobal Gas Security Review 2023
Including the Gas Market Report, Q3-2023

PAGE | 92

IEA. All rights reserved.

AnnexAnnexGlobal Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Summary table
World natural gas consumption and production by region and key country (bcm)
Production

2020

2021

2022

2023

2024

2020

2021

2022

2023

2024

Africa

161

169

164

168

173

241

262

247

253

264

Asia Pacific

834

891

877

901

940

626

651

659

670

680

325

367

364

387

414

189

205

218

229

240

Central and South America

142

153

150

144

147

150

148

152

145

149

Eurasia

584

634

608

609

622

866

961

868

792

819

460

501

473

475

485

692

762

672

610

625

Europe

576

609

524

489

499

230

222

230

220

221

Middle East

547

562

575

588

603

669

692

713

726

744

North America

1 079

1 091

1 145

1 143

1 136

1 145

1 183

1 230

1 250

1 260

868

874

921

919

911

954

984

1020

1040

1048

3 924

4 109

4 043

4 042

4 120

3 927

4 119

4 099

4 056

4 137

of which Chinaof which Russia

of which United States

World

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IEA. All rights reserved.

Consumption

AnnexGlobal Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Regional and country groupings
Africa – Algeria, Angola, Benin, Botswana, Cameroon, Congo, Democratic
Republic of the Congo, Côte d’Ivoire, Egypt, Eritrea, Ethiopia,
Gabon, Ghana, Kenya, Libya, Morocco, Mozambique, Namibia,
Nigeria, Senegal, South Africa, Sudan, United Republic of
Tanzania, Togo, Tunisia, Zambia, Zimbabwe and other countries
and territories.1

Middle East – Bahrain, the Islamic Republic of Iran, Iraq, Israel,8 Jordan,
Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, the Syrian Arab
Republic, the United Arab Emirates and Yemen.
North Africa – Algeria, Egypt, Libya, Morocco and Tunisia.
North America – Canada, Mexico and the United States.
1 Individual data are not available and are estimated in aggregate for: Burkina Faso, Burundi, Cape
Verde, the Central African Republic, Chad, Comoros, Djibouti, Equatorial Guinea, Gambia, Guinea,
Guinea-Bissau, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius, Niger, Reunion,
Rwanda, Sao Tome and Principe, Seychelles, Sierra Leone, Somalia, Swaziland and Uganda.
2 Including Hong Kong.
3 Individual data are not available and are estimated in aggregate for: Afghanistan, Bhutan, Cook
Islands, Fiji, French Polynesia, Kiribati, the Lao People’s Democratic Republic, Macau (China),
Maldives, New Caledonia, Palau, Papua New Guinea, Samoa, Solomon Islands, Timor-Leste,
Tonga and Vanuatu.
4 Individual data are not available and are estimated in aggregate for: Antigua and Barbuda, Aruba,
Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Dominica, Falkland
Islands (Malvinas), French Guyana, Grenada, Guadeloupe, Guyana, Martinique, Montserrat, St
Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Suriname and Turks and Caicos Islands.
5 Note by the Republic of Türkiye.
The information in this document with reference to “Cyprus” relates to the southern part of theIsland. There is no single authority representing both Turkish and Greek Cypriot people on the
Island. The Republic of Türkiye recognises the Turkish Republic of Northern Cyprus (TRNC). Until
a lasting and equitable solution is found within the context of the United Nations, The Republic ofTürkiye shall preserve its position concerning the “Cyprus issue”.
6.Note by all the European Union Member States of the OECD and the European Union
The Republic of Cyprus is recognised by all members of the United Nations with the exception of
Türkiye. The information in this document relates to the area under the effective control of theGovernment of the Republic of Cyprus.
7 The designation is without prejudice to positions on status, and is in line with the United Nations
Security Council Resolution 1244/99 and the Advisory Opinion of the International Court of Justiceon Kosovo’s declaration of Independence.
8 The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli

Asia Pacific – Australia, Bangladesh, Brunei Darussalam, Cambodia,
Chinese Taipei, India, Indonesia, Japan, Korea, the Democratic
People’s Republic of Korea, Malaysia, Mongolia, Myanmar,
Nepal, New Zealand, Pakistan, the People’s Republic of China,2
the Philippines, Singapore, Sri Lanka, Thailand, Viet Nam andother countries and territories.3
Central and South America – Argentina, Bolivia, Brazil, Chile, Colombia,
Costa Rica, Cuba, the Dominican Republic, Ecuador, El
Salvador, Guatemala, Haiti, Honduras, Jamaica, Netherlands
Antilles, Nicaragua, Panama, Paraguay, Peru, Trinidad andTobago, Uruguay, Venezuela and other countries and territories.4
Eurasia – Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, theRussian Federation, Tajikistan, Turkmenistan and Uzbekistan.
Europe – Albania, Austria, Belarus, Belgium, Bosnia and Herzegovina,
Bulgaria, Croatia, Cyprus,5,6 the Czech Republic, Denmark,Estonia, Finland, the Former Yugoslav Republic of North
Macedonia, France, Germany, Gibraltar, Greece, Hungary,
Iceland, Ireland, Italy, Kosovo,7 Latvia, Lithuania, Luxembourg,
Malta, the Republic of Moldova, Montenegro, the Netherlands,
Norway, Poland, Portugal, Romania, Serbia, the Slovak
Republic, Slovenia, Spain, Sweden, Switzerland, Republic ofTürkiye, Ukraine and the United Kingdom.

PAGE | 94

IEA. All rights reserved.

authorities. The use of such data by the OECD and/or the IEA is without prejudice to the status of
the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms ofinternational law.

European Union – Austria, Belgium, Bulgaria, Croatia, Cyprus,5,6 the Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece,
Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, theNetherlands, Poland, Portugal, Romania, the Slovak Republic,
Slovenia, Spain and Sweden.

AnnexGlobal Gas Security Review 2023
Including the Gas Market Report, Q3-2023

AEMO

Australian Energy Market Operator

GX

Green Transformation programme (Japan)

ANP

National Petroleum Agency (Brazil)

HH

Henry Hub

ARERA

National Regulatory Authority for Energy (Italy)

HoA

Head of Agreement

BMC

Colombian Mercantile Exchange (Colombia)

IEA

International Energy Agency

CCGT

combined cycle gas turbine

ICE

Intercontinental Exchange

CCUS

Carbon Capture, Utilisation and Storage

ICIS

Independent Chemical Information Services

CII

Carbon Intensity Indicator

IEA

International Energy Agency

CME

Chicago Mercantile Exchange (United States)

IMO

International Maritime Organization

CNE

National Energy Commission (Chile)

JKM

Japan Korea Marker

CQPGX

Chongqing Petroleum Exchange (the People’s Republic ofChina)

JODI

Joint Oil Data Initiative

EBN

Energie Beheer Nederland

JPY

Japanese yen

EEXI

Energy Efficiency eXisting ship Index

KEEI

Korea Energy Economics Institute

EIA

Energy Information Administration (United States)

LBG

liquefied biomethane

EMRA

Energy Market Regulatory Authority (Republic of Türkiye)

LEGWP

Low-Emission Gases Work Programme

LNG

liquefied natural gas

METI

Ministry of Economy, Trade and Industry (Japan)

MoU

Memorandum of Understanding

MME

Ministry of Mines and Energy (Brazil)

NBP

National Balancing Point (United Kingdom)

NDRC

National Development and Reform Commission (the People’s
Republic of China)

OCCTO

Organization for Cross-regional Coordination of Transmission
Operators (Japan)

ENARGAS National Gas Regulatory Entity (Argentina)
ENTSOG

European Network of Transmission System Operators for Gas

EPIAS

Energy Markets Operations Inc. (Republic of Türkiye)

EPPO

Energy Policy and Planning Office (Thailand)

EU

European Union

EUR

Euro

FID

final investment decision

FLNG

floating liquefied natural gas

FSRU

floating storage and regasification unit

OECD

Organisation for Economic Co-operation and Development

GHGs

greenhouse gases

ONS

National Electric System Operator (Brazil)

GIE

Gas Infrastructure Europe

OSINERG

Energy Regulatory Commission (Peru)

PPAC

Petroleum Planning and Analysis Cell (India)

PAGE | 95

IEA. All rights reserved.

Abbreviations and acronyms

AnnexGlobal Gas Security Review 2023
Including the Gas Market Report, Q3-2023

RFO

Residual Fuel Oil

SBLStrategic Buffer LNG

SMR

steam methane reforming/reformer

SNG

synthetic natural gas

SPA

Sales and Purchase Agreement

TFFS

Task Force on Gas and Clean Fuels Market Monitoring and
Supply and Security

TTF

Title Transfer Facility (the Netherlands)

UGS

underground storage

USD

United States dollar

y-o-y

year-on-year

Units of measurebillion cubic feetbillion cubic feet per day
billion cubic metres
billion cubic metres per year
gigajoulegigawatt
kilowatt hour
million British thermal units
million tonnes
million tonnes per year
cubic metres per hour
cubic metres per year
normal cubic metreparts per million
terawatt hour
tonnes per year

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IEA. All rights reserved.

bcf
bcf/d
bcm
bcm/yr
GJ
GW
kWh
MBtu
Mt
Mt/yr
m3/hr
m3/yr
Nm3
ppm
TWh
t/yr

AnnexGlobal Gas Security Review 2023
Including the Gas Market Report, Q3-2023

Acknowledgements, contributors and credits
This publication has been prepared by the Gas, Coal and Power
Markets Division (GCP) of the International Energy Agency (IEA).
The analysis was led and co-ordinated by Gergely Molnár. LouisThe IEA Communication and Digital Office (CDO) provided
production and launch support. Particular thanks go to Jethro
Mullen and his team: Poeli Bojorquez, Astrid Dumond, Grace

Chambeau, Carole Etienne, Gergely Molnár and Takeshi Furukawa

Gordon, Julia Horowitz, Oliver Joy, Isabelle Nonain-Semelin, Oscar
Padula, Charner Ramsey, Clara Vallois and Therese Walsh.

are the main authors.
Keisuke Sadamori, Director of the IEA Energy Markets and Security(EMS) Directorate, provided expert guidance and advice. The reportbenefitted from the review of senior management, including Tim
Gould, Chief Energy Economist and Dennis Hesseling, Head ofJustin French-Brooks edited the report.
The report was made possible by assistance from Tokyo Gas.
The individuals and organisations that contributed to this report are
not responsible for any opinion or judgement it contains. Any error
or omission is the sole responsibility of the IEA.

Gas, Coal and Power Markets Division.
Amalia Pizarro (HAF) provided guidance on hydrogen storage.
Elizabeth Connelly, Laurence Cret and Jacob Teter provided
guidance on low-emission fuels in the maritime sector. Eren Cam,
Carlos Fernandez Alvarez and Hiroyasu Sakaguchi provided
support.

For questions and comments, please contact GCP (gcp@iea.org)
or Gergely Molnár (Gergely.Molnar@iea.org).

The report benefitted from the survey carried out across themembers of the Task Force on Gas and Clean Fuels Market
Monitoring and Supply and Security on natural gas storage and its
evolving regulatory frameworks.

PAGE | 97

IEA. All rights reserved.

Timely and comprehensive data from the Energy Data Centre were
fundamental to the report.

International Energy Agency (IEA)
This work reflects the views of the IEA Secretariat but does notnecessarily reflect those of the IEA’s individual member countries orof any particular funder or collaborator. The work does notconstitute professional advice on any specific issue or situation. The
IEA makes no representation or warranty, express or implied, inrespect of the work’s contents (including its completeness or
accuracy) and shall not be responsible for any use of, or relianceon, the work.

Subject to the IEA’s Notice for CC-licenced Content, this work islicenced under a Creative Commons Attribution 4.0 International
Licence.
This document and any map included herein are without prejudice
to the status of or sovereignty over any territory, to the delimitationof international frontiers and boundaries and to the name of any
territory, city or area.
Unless otherwise indicated, all material presented in figures andtables is derived from IEA data and analysis.
IEA Publications
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Contact information: www.iea.org/about/contact

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Annex