scorecardExpect the natural gas market to tighten if China rebounds to compete with Europe for supply, IEA chief says
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Expect the natural gas market to tighten if China rebounds to compete with Europe for supply, IEA chief says

Zahra Tayeb   

Expect the natural gas market to tighten if China rebounds to compete with Europe for supply, IEA chief says
Stock Market1 min read
  • The market for liquefied natural gas will get tighter if China's economy rebounds, the IEA's head said Tuesday.
  • That will mean more competition for supply with energy-starved Europe, according to Fatih Birol.

The market for liquefied natural gas will tighten if China's economy rebounds and it goes up against energy-hungry Europe for supply, according to the head of the International Energy Agency.

Fatih Birol stepped up his warnings about a coming squeeze in global gas supplies even as investors fretted about the potential risk to Chinese economic growth from President Xi Jingping's increased grip on power.

Speaking at a Singapore conference, Birol said only 20 billion cubic metres of new LNG capacity will go to market in 2023, per Reuters.

Europe has been drinking up LNG imports from sellers worldwide, as it tries to replace the flows cut off by Russia in retaliation to Western sanctions over the Ukraine war.

Meanwhile, a zero COVID-related slowdown in China, the world's second-biggest economy, has dampened the outlook for global gas demand. But those coronavirus curbs, which have hit industries and households, could be lifted in coming months.

That sets up a potential tug-of-war for supplies between a revived China, leaving little room to negotiate prices — and that could send natural gas prices higher, after falling over 70% since August.

But with President Xi Jingping consolidating his power in the Communist Party, investors are growing worried on whether China's economy can bounce back. He unceremoniously ejected his business-friendly predecessor Hu Jintao from proceedings at the weekend, prompting fears that politics will replace economic growth as a high priority.

And there are signs Beijing might not hit its economic goal for the year. Its GDP rose 3.9% year-on-year in the third quarter, beating expectations for 3.2%. Even so, the print is seen as undershooting what the Chinese government needs to reach its GDP target of 5.5% growth this year.




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