Natural gas demand in the European Union (EU) has dropped significantly over the last eight months, surpassing a voluntary target to cut consumption that was adopted by the bloc last August, according to data released by Eurostat.
The EU’s statistical office said natural gas consumption dropped by 17.7% between August 2022 and March, compared with the same period over the previous five years. The bloc aimed to cut gas consumption by 15% over the last eight months as it worked to secure alternate supplies and ensure adequate storage inventories after Russia cut off gas exports following its invasion of Ukraine.
Eurostat said data showed the majority of EU member countries reached the 15% reduction target, except for Belgium, Ireland, Poland, Slovakia, Slovenia and Spain, which registered lower declines in gas consumption. Natural gas demand fell the most in Finland (55.7%), Lithuania (40.5%) and Sweden (37.2%).
Natural gas prices skyrocketed in Europe last year after Russia curbed exports, at times trading above $100/MMBtu. The rapid climb in prices destroyed demand, particularly in the industrial sector, where output was curbed. Some companies also relocated operations.
Eurostat said consumption consistently declined between January 2022 and last month. However, the biggest decreases were registered in the second half of last year, when prices were at their highest. Eurostat said the steep declines started in August, when a 14% reduction was registered. That was followed by a 14.3% decline in September, a 24.4% decline in October, a 25% decrease in November and a 12.3% drop in December.
Prices have fallen precipitously since last year, with the benchmark Dutch Title Transfer Facility currently trading around $13. The contract remains high relative to historical averages. Eurostat said strong declines in gas consumption have continued this year. While storage inventories are at 56% of capacity, well above the five-year average of 36% for this time of year, European governments have continued to stress the importance of demand reduction as the continent prepares for another winter without Russian gas. Last month, the voluntary gas reduction targets were extended until next year.
