Gas consumption in the EU-27 in the first quarter of 2021 rose by 7.6% year on year to 141.8 Bcm, the European Commission said in its most recent quarterly gas market report published July 9.
EU gas demand was boosted by a number of cold spells in the quarter, which impacted gas consumption for residential heating needs, and by a 3.4% increase in gas use for power generation.
“In the first quarter of 2021 gas consumption in the EU was higher than in the same months of 2020, and closer to the upper range of the last five years,” the EC said.
It added that the “widespread” practice of remote working might also have contributed to the overall increase in gas consumption in the residential sector.
Gas demand rose in 22 of the EU member countries, with Spain the only large gas consumer to register a decrease.
Among the biggest gas consuming countries, demand rose in Germany by 11% — or 3.4 Bcm — in Q1, in the Netherlands by 10% (1.4 Bcm), in France by 6% (0.9 Bcm), and in Italy by 5% (1.2 Bcm).
The quarterly market report excludes the UK — which left the EU at the end of January 2020 — in both absolute terms and for year-on-year comparisons.
EU production slump
EU gas production fell sharply by 11% year on year in Q1, amounting to just 13.8 Bcm, the EC said.
“During Q1, similar to the previous quarters, gas output was below the 2015-2019 range, reflecting the dwindling trend of gas production in the EU,” it said.
Total EU gas production in Q1 2021 was the second-lowest quarterly figure over the past seven years, just above the 11.3 Bcm recorded in Q3 2020 when European gas prices bottomed out.
In the Netherlands, the EU’s biggest gas producer, Q1 output fell by 13% year on year to 6.1 Bcm, while in the bloc’s second-biggest gas producer Romania, production fell by 7% to 2.4 Bcm.
Gas production also fell by 2% in Poland to 1.4 Bcm, while in Germany, Italy and Ireland, where production amounted to 1.2 Bcm, 0.9 Bcm and 0.4 Bcm, respectively, in Q1 2021, year-on-year decreases varied between 7% and 25%.
Gas output also slumped in Denmark by 21% year on year to 0.3 Bcm, due to the redevelopment of the Total-operated Tyra field in the Danish North Sea.
Import decline
Despite the fall in production and rise in demand, imports also fell in Q1, with total net extra-EU gas imports totaling 78.5 Bcm, down 3% year on year.
The drop implies that the majority of the demand increases in the quarter were met by EU storage, with sites across Europe significantly drawn down in the first months of 2021.
The five biggest importers in the EU in Q1 were Germany (22 Bcm), Italy (17 Bcm), France (10 Bcm), Spain (8 Bcm), and Belgium (6 Bcm), representing together more than 85% of the total EU net gas imports in Q1 2021.
As in previous quarters, Russia was the top gas supplier to the EU and the share of Russian pipeline gas in the extra-EU gas imports was 45%, up from 41% in Q1 2020.
The share of pipeline gas imports from Norway was 23%, flat on the year, as Norwegian pipeline gas imports decreased by a similar extent as overall gas imports.
In Q1, pipeline gas imports from Algeria increased significantly, the EC said, by 141% year-on-year.
That resulted in an increasing share within the total extra-EU imports, reaching 12% in Q1, the highest share since Q4 2017, and up from 5% in Q1 2020.
“Increasing pipeline gas imports from Algeria must have been related to the oil-indexed contracts becoming competitive against hub-based pricing as a consequence of the time-lagged impact of the oil price fall in 2020 and the recent increase in wholesale gas prices on the European hubs,” the EC said.
The share of LNG was 19.6% in the total EU gas imports, which was eight percentage points lower year on year.
“Decreasing LNG imports in the EU was principally owing to the high price premium of the Asian gas markets to Europe, especially in January 2021, resulting in the redirection of LNG cargoes toward Asia,” the EC said.
At the end of 2020, the TAP gas pipeline, bringing Azeri gas via Greece to Italy, also became operational.
However, its share of total imports was just 1.2% in Q1, the EC said.
Source: Platts