Industry Trend Analysis - Growing Gas Import Dependence Benefiting LNG - JUNE 2017

BMI View: LNG cargos will increase their share of Europe ' s growing gas import s as consumption ticks up and regional supply wanes; we also expect pipeline imports to grow in volume terms over the coming years.

Europe's gas demand is set to remain firm over the coming years, due to low LNG and hub prices encouraging uptake, coupled with structural shifts in the power market. We forecast gas consumption in the five main Western European gas markets (United Kingdom, Italy, France, Germany and Netherlands) to grow from 313.7bn cubic metres (bcm) in 2016 to 326.3bcm in 2021, a 4% increase.

While consumption is ticking upwards, production on a regional basis is trending downwards, with our forecasts showing a 10.0bcm fall between 2017 and 2021, from the combined output of Norway, United Kingdom, Netherlands and Germany. However, despite a regional downward trend over a five-year period, we expect supplies to grow in the next two years. This growth is being driven by the North Sea producers Norway and the United Kingdom. We expect Norway's production to grow from 117.4bcm in 2016 to 123.6bcm in 2019, while the UK is forecast to grow from 42.8bcm in 2016 to 49.9bcm in 2017, maintaining similar levels until 2019, with the Culzean project coming giving production another boost.

European Gas Demand Growing
Dry Natural Gas Consumption, bcm
e/f= BMI estimate/ forecast. Source: National Sources, BMI

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