Industrial demand for natural gas falling by 30% in Europe, says Engie exec

Published 10:36 on September 21, 2022  /  Last updated at 10:36 on September 21, 2022  /  Uncategorized  /  No Comments

Demand for natural gas from energy-intensive industrial companies in Europe has fallen by around 30% in recent weeks as the region grapples with the soaring costs of energy and a worsening economic outlook, Jean-Pierre Clamadieu, chairman of utility Engie said on Wednesday.

Demand for natural gas from energy-intensive industrial companies in Europe has fallen by around 30% in recent weeks as the region grapples with the soaring costs of energy and a worsening economic outlook, Jean-Pierre Clamadieu, chairman of utility Engie said on Wednesday.

Output from ETS-covered heavy industry is being closely watched by carbon traders as the price direction of carbon allowances is caught in a ‘tug of war’ between lower factory activity and more carbon-intensive power generation as utilities seek alternatives to high-price gas while hydro and nuclear sources struggle.

“We have seen in these last weeks in Europe a significant reduction in consumption by large energy intensive industrials,” Clamadieu told France Inter radio.

“Consumption is 30% lower than what we saw last year. This is good news for us as we approach winter, but very bad news for European industry,” he added.

European countries have scrambled to introduce measures to reduce consumption of gas after Russia reduced and eventually suspended deliveries of the fuel through the Nord Stream 1 pipeline. 

Prices for natural gas have rocketed this year, with the benchmark front-month TTF contract rising from €80/MWh at the start of the year to as much as €330/MWh.

Clamadieu said demand from energy intensive industry has fallen by 15% in France, around -25% in Germany and almost -40% in the Netherlands.

“Industrials have responded to the price signal by suspending operations at their factories, or moving production to other parts of the world,” he said.

The head of Engie said that Europe was “much better prepared [for the winter] than we feared three or four months ago.” 

“Gas storages in France are 85-86% full and in a few weeks we will be at maximum,” Clamadieu said. 

“In Europe we’re at about 90%. We weren’t sure we’d get to this level, but we’ve massively increased LNG imports; we’re currently receiving 30 to 40 shipments each week.”

Clamadieu said there are three key conditions for getting through the winter without shortages.

“First, we need a normal winter. Second, we need Asian demand to remain average, for their economies not to pick up too much speed. Much of the LNG we are receiving is gas that is contracted to China, but which in their current difficult economic climate they do not need.”

“And we need to cut consumption by 10%.”

By Alessandro Vitelli – av@carbon-pulse.com