The global gas market is growing and competition increasing due to expansions in LNG capacity. EU demand is not expected to grow, but import dependency is set to increase in the next decade. The effects of climate policy and technology development are the main uncertainties in the longer term.
Norway exports practically all its gas production and a large share of exports are supplied to the European market. Norwegian gas still covers a significant share of European gas consumption. But what is the future role of Norwegian natural gas in the European energy system? Commissioned by the Norwegian Oil and Gas Association, THEMA has prepared an updated status report for the European gas market.
The gas market’s development depends on the time horizon considered. Unsurprisingly, long-term development depends on the interplay between policy, technology and market forces.
Globally, gas consumption is on the rise, in particular in developing economies. In the EU, consumption is expected to be relatively stable or increase only modestly in the short- to medium-term. However, since EU production of natural gas is falling, EU import dependency will increase. Norwegian gas imports are important to the EU – they make up over a third of total import volumes and are seen as reliable source with a small carbon footprint relative to other sources.
In the power sector, gas generation will continue to play a valuable role in balancing supply and demand as more intermittent renewable power generation is installed and coal-fired power generation units are phased out. But gas generation is not the only source of flexibility in the market, and must compete with batteries, power-to-gas (hydrogen), demand side flexibility and heat storage.
In the longer term, stricter climate policies and technology development could lead to a reduction in gas demand if gas is out-competed by low-carbon solutions.
Download the report here (in Norwegian):
THEMA Rapport 2017-22 >> Gassens rolle i Europa – 2017