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"Fitch Solutions": Azerbaijan will continue to increase gas exports to the EU and Britain

08 November 2022 18:02 (UTC +04:00)

In this piece, we explore potential scenarios for the European gas market in 2023. Under all scenarios, the market remains fundamentally tight in 2023, APA-Economics reports citing the Agency.
Outside of Russia, the region’s major suppliers of piped gas – Norway, Algeria, Libya and Azerbaijan – will likely continue to maximise their exports to the EU and UK, responding to high gas prices and favourable regional price differentials. However, we see little room for export growth in 2023, due to upstream capacity constraints.
Likewise, regional gas production remains heavily constrained, weighed down by an ageing asset base and limited investment in greenfield additions.
On the supply side, Russia is the key ‘known unknown’ and Moscow’s actions will have a strong bearing on European gas market dynamics over the coming quarters.
Demand could also fluctuate considerably, depending on various factors, including end-user price levels, government policy and weather conditions.
European gas storage currently stands at 93.4% utilisation, significantly above the 88.9% five-year historical average for the time of year, offering an important buffer against potential unplanned supply outages or surges in demand.
Ultimately though, LNG imports will be the balancing factor, although Europe will face stiff competition for supplies in 2023.