KUALA LUMPUR (Oct 4): Global natural gas markets are expected to remain tight into 2023 as Russia further reduces supplies to Europe, said the International Energy Agency (IEA).

In its latest quarterly Gas Market Report, the agency said Russia’s continued curtailment of natural gas flows to Europe has pushed international prices to painful new highs, disrupted trade flows and led to acute fuel shortages in some emerging and developing economies, with the market tightness expected to continue well into 2023.

The IEA said natural gas markets worldwide have been tightening since 2021, and global gas consumption is expected to decline by 0.8% in 2022 as result of a record 10% contraction in Europe and unchanged demand in the Asia Pacific region.

It said global gas consumption is forecast to grow by only 0.4% next year, but the outlook is subject to a high level of uncertainty, particularly in terms of Russia’s future actions and the economic impacts of sustained high energy prices.

IEA said Russia has largely cut off gas supplies to Europe in retaliation against sanctions imposed on it following its invasion of Ukraine.

It said this has deepened market tensions and uncertainty ahead of the coming winter, not just for Europe but also for all markets that rely on the same supply pool of liquefied natural gas (LNG).

The IEA’s director of energy markets and security Keisuke Sadamori said Russia’s invasion of Ukraine and sharp reductions in natural gas supplies to Europe are causing significant harm to consumers, businesses and entire economies, not just in Europe but also in emerging and developing economies.

 “The outlook for gas markets remains clouded, not least because of Russia’s reckless and unpredictable conduct, which has shattered its reputation as a reliable supplier.

“But all the signs point to markets remaining very tight well into 2023,” he said.

The IEA said the current gas crisis also casts longer-term uncertainty on the prospects for natural gas, especially in developing markets where its use was expected to rise at least in the medium term as it replaced other higher-emission fossil fuels.