Europe industrial gas demand down sharply

SOFIA - Industrial demand for gas has fallen sharply in Europe, with demand falling by anything up to 25 percent, because of the economic crisis, a senior vice-president at GDF Suez said on Friday.

By (Reuters)

Published: Fri 24 Apr 2009, 7:23 PM

Last updated: Thu 2 Apr 2015, 3:41 AM

“Throughout Europe we have seen a very significant reduction in demand in the industrial sector,” Edouard Sauvage told Reuters on the sidelines of an energy security conference in Sofia, Bulgaria.

He said industrial demand for gas in France had fallen between 5 and 10 percent and demand in neighbouring Belgium, where the company is a major supplier, had declined even more.

“We have seen figures in Belgium that are even more significant, we’ve been told between 10 and 20 or even 25 percent,” he said.

He said demand for gas from the power sector had also fallen significantly, particularly in Italy and Belgium, as gas-fired power plants switch from burning gas around the clock to producing during peak demand periods.

Low gas prices in Britain over the last few months have encouraged generators to burn it instead of coal but demand from the power sector in other parts of Europe where gas prices have not fallen so markedly has waned as electricity demand sags.

“But as the weather was cold in most of western Europe the global demand is roughly stable,” Sauvage said.

Gas is used in an increasing number of power stations around the world and particularly in Europe because it is cleaner burning than the main alternative fossil fuel coal.

It is also widely used for heating in northern and eastern Europe in winter and in chemical and ceramics production, among other industrial uses.

LNG demand

Demand for liquefied natural gas (LNG), which unlike fuel supplied by pipeline is traded globally, has also fallen with Britain’s new import terminals and unusually accessible spot market allowing LNG shippers like GDF Suez to sell excess cargoes only until storage is full.

How much LNG Britain and continental Europe will absorb to refill their reserves—which were drained during January’s Russian gas supply cuts—remains unclear.

“We all know that the demand of north east Asia has significantly reduced, due to the economic crisis especially in Japan and Korea,” he said.

“But at the same time...there’s room in Europe and there’s clearly room in terminals in the United States so in the end its a question of price.”

He declined to comment on talks with Russian gas monopoly Gazprom about the European gas major taking a stake in the North Stream gas pipeline project to bring Russian gas to western Europe via the Baltic Sea.

GDF Suez Chief Executive Gerard Mestrallet said this month getting a stake in the pipeline was part of its drive to secure and strengthen its gas supplies.

GDF Suez is a leading buyer of gas in Europe and one of the world’s largest LNG players. It imports LNG into Europe, including Britain, Belgium and France, and owns several gas fired power plants across the continent.

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