Europe Gas Industry

Europe Gas Market Analysis

The Europe Gas Market is expected to register a CAGR of greater than 2.5% during the forecast period.

The COVID-19 pandemic negatively impacted the market in 2020. Presently, the market has reached pre-pandemic levels.

• Over the long term, factors such as the surge in demand for natural gas within countries, namely Germany, the United Kingdom, and Italy, are expected to drive the market during the forecast period.
• On the other hand, the increasing benefits of renewables, and the region's plan to increase the share of renewables in the energy mix, complemented by volatile natural gas prices, are expected to restrain the growth of the studied market.
• Nevertheless, technological improvements and increased natural gas production from numerous gas fields, such as the Groningen natural gas field, Snohvit gas field, and Troll oil and gas fields,are expected to create ample opportunities for the market players.
• Norway is expected to dominate the market due to its increasing natural gas production during the forecast period.

Europe Gas Market Trends

Utility Sector (i.e., Power Generation) Sector Expected to Dominate the Market

• Power generation uses a variety of sources ranging from fossil fuels, such as natural gas, coal, and oil, to renewable sources, such as wind and solar. As of 2021, Europe generated around 23.7 % of its electricity from natural gas.
• The power generation mix is heavily skewed toward natural gas because of cheaper domestic fuel availability and vast reserves. Due to constraints in adding other conventional generation sources, viz., hydro, solar, and oil, its share in the mix has increased over the years.
• In 2021, electricity generated from oil, natural gas, and coal produced around 259.4 billion kWh of the total electricity generated, accounting for over 45% of the total electricity production across Germany. The growing number of natural gas-fired power plants in Germany will, in turn, showcase the utilization of natural gas within the country.
• Also, as of 2021, among the European countries, Belarus generated the most electricity from natural gas, accounting for 95.7%, followed by Malta, Italy, and the Netherlands. This shows that power generation through natural gas is predominant in Europe.
• In December 2021, Ansaldo Energia began construction works for a project that aimed at improving the efficiency of the EP Produzione combined-cycle gas turbine (CCGT) in Tavazzano and Montanaso in Italy's Lodi province. The new 800 MW CCGT unit is scheduled to get commissioned by November 2023.
• Owing to the above points, the utility sector is expected to dominate the European gas market during the forecast period.

Norway Expected to Dominate the Market

• Norway has rich natural gas reserves. As of 2021, with 114.3 billion cubic meters, the country was its topmost producer. It has displaced Russia as the top supplier of NatGas to the EU as energy supply chains are rejiggered.
• By the end of the year 2022, natural gas demand across the country was expected to recover to its pre-crisis levels and increase slightly during the forecast period. It must be mentioned that in 2021, the country's natural gas consumption was around 4.3 billion cubic meters (bcm).
• To meet the demand and offset the production decline from maturing assets, investments in new gas fields are being undertaken by the operators in the North Sea. With more than 20 development wells associated with these projects, new project sanctions will directly impact increased drilling activity over the next three years.
• In November 2021, under the development plan, Norway's state-controlled Equinor was expected to turn the Oseberg field on the Norwegian Continental Shelf from primarily being an oil asset into a gas producer.
• Moreover, in July 2022, Eesti Gaas AS, an energy company in Estonia, signed an agreement to buy two terawatt-hours (TWh) of liquefied natural gas from Equinor. The deal cost is around USD 315.53 million.
• Owing to the above points, Norway is expected to dominate the European gas market during the forecast period.

Europe Gas Industry Overview

The European gas market is moderately fragmented. Some of the key players in the market (in no particular order) are BP PLC, Equinor ASA, TotalEnergies SE, Chevron Corporation, and Exxon Mobil Corporation.

Europe Gas Market Leaders

Europe Gas Market News

• September 2022: Russia's Gazprom announced shipping 42.4 million cubic meters (mcm) of natural gas to Europe via Ukraine. The shift was part of a push by Russia to reduce its reliance on the US dollar.
• September 2022: The Baltic Pipe was inaugurated at Goleniów, Poland, marking the completion of the Baltic Pipe construction. The pipeline connects various countries, viz., Norway, Denmark, Poland, and neighboring countries. With this project, countries can now import up to 10 billion cubic meters (bcm) of gas annually from Norway to Poland and transport up to three bcm of gas from Poland to Denmark.