The International Energy Agency (IEA) has recently published its Global Gas Security Report, shedding light on the anticipated increase in liquefied natural gas (LNG) supplies needed in Europe for next year. The report indicates that “natural gas supply is still tight, and uncertainty continues to pressure the outlook for 2025.”

In the report, released on October 3, the IEA projected that global natural gas consumption is expected to hit record levels this year, driven by intensified competition for LNG shipments between Asia and Europe. Looking ahead, global demand for natural gas is also set to reach historic highs next year.

Interestingly, the IEA’s analysis suggests a possible 2% decrease in European gas consumption compared to 2023, following a reduction in imports this year. While there’s been a rebound in industrial demand, it still remains lower than pre-crisis levels. Furthermore, the dependence on natural gas in the power sector is declining, largely due to the rise of renewable energy sources.

Despite a decrease in gas prices across Europe since the crisis peaks of 2022, consumers are still facing the challenge of rising energy costs. Ongoing geopolitical tensions, from the conflict in Ukraine to escalating issues in the Middle East, have contributed to the fluctuation in gas prices and the overall market landscape.

However, the IEA is also optimistic, stating that global gas consumption is on track to reach record levels this year, with further growth anticipated in 2025. They project a global gas demand increase of over 2.5% for 2024, with a similar growth rate expected for 2025, largely driven by demand in Asia.

A key uncertainty for the winter of 2024-2025 involves the expiration of the current gas transit agreement between Moscow and Kyiv at the end of December. Should Russia decide to stop gas exports through Ukraine, Europe will face the necessity of importing even more LNG next year, which could tighten market supplies.

To tackle these challenges, the IEA recommends improving the liquidity of the global LNG market, integrating Ukraine’s gas storage system into the global framework, and exploring the feasibility of establishing a voluntary gas reserve mechanism. This would enhance the resilience of gas systems and the LNG value chain.

Keisuke Sadamori, the IEA’s Director of Energy Markets and Security, emphasized, “The growth in global natural gas demand that we’re witnessing this year and next reflects a market gradually recovering from the global energy crisis. However, the balance between demand and supply trends remains fragile, and the risk of volatility is substantial. It’s imperative that producers and consumers collaborate closely to navigate these uncertain times while also prioritizing the transition to cleaner energy for a secure and sustainable future.”

The report also notes that despite certain vulnerabilities in global LNG trade, the landscape could shift by 2025. With several large-scale LNG projects expected to go online in the latter half of the year, the growth of LNG supply could accelerate to almost 6%, particularly with significant contributions from newly added capacity in North America.