Gas demand
After the period of high demand for gas and a decrease in energy production from renewable sources, the EU is striving to enhance its internal energy security both through geological exploration and by boosting electricity trading in order to diversify supplies and accelerate the transition to net zero. At the same time, calls are growing in Europe to lift the ban on shale resource extraction.
The demand for natural gas in the EU continued to grow actively during the 2024/25 heating season. In Europe, TTF prices for the month ahead were 55% higher than last year’s levels, averaging just over $13 per MMBtu ($465.4 thousand per cubic meter), according to europeangashub.com.
In Europe, gas consumption increased by almost 10% year-on-year during the winter season. Lower wind speeds and reduced hydro energy availability in southern Europe led to a more than 20% increase in gas consumption in the power sector, while lower temperatures contributed to higher gas usage in the residential and commercial sectors.
In the United States, severe winter temperatures led to a significant increase in natural gas consumption, reaching a new record level during the 2024/25 winter season.
Gas demand in the sector increased by nearly 7% year-on-year due to lower temperatures, while the demand from gas-fired power plants and industrial gas consumption grew at a more moderate pace. Higher prices at the Henry Hub are currently undermining the competitiveness of gas-fired power plants, contributing to a shift from gas to coal in some U.S. states.
In China, the growth in gas demand sharply slowed since November of last year and has generally remained at the same level compared to the previous heating season. LNG imports to China fell by approximately 20% year-on-year in the first quarter of 2025, amid higher spot LNG prices, which are also limiting demand growth.
In Russia, projected supplies to the domestic market decreased by nearly 4% as the country experienced one of the mildest winters on record.
As always, gas storage played a crucial role in ensuring safe and stable gas supplies throughout the winter season.
Both in Europe and the United States, gas storage levels are currently well below the five-year average, which means that injections into storage will be significantly higher this summer.
Industrial gas
After a turbulent winter, global industrial gas demand decreased in the first quarter of 2025, marking the first decline since the 2022/23 gas crisis. At the same time, industry became the key driver of gas consumption growth in 2024, accounting for nearly 40% of the increase in gas demand last year. This was partly due to the recovery of the European economy and the ongoing economic growth in China and India.
The situation is set to change rapidly in 2025, as high gas prices and macroeconomic uncertainty will put pressure on industrial gas demand across all key markets.
In China, industrial gas demand has shifted into negative territory since November of last year, declining by approximately 3% in the first quarter of 2025. The last time such a decrease occurred was in 2022, during the darkest days of the gas crisis.
Although China reported a 5.4% GDP growth for the first quarter of 2025, there are signs that the country's economic growth is slowing, which is also affecting industrial gas demand as well as electricity consumption (which decreased by 0.3%). Furthermore, some energy-intensive industries may opt to shift from gas to coal in order to mitigate the impact of high spot LNG prices on their overall electricity costs.
Industrial gas consumption in the United States increased by nearly 1% during the heating season, potentially benefiting from the comparative advantage provided by lower Henry Hub prices (which were less than half of TTF and JKM prices).
In India, industrial gas demand decreased by just over 2% year-on-year from October to February, with the most significant impact on the fertilizer sector, where gas consumption fell by nearly 6% year-on-year.
In Europe, industrial gas demand decreased by approximately 5% year-on-year in the first quarter of 2025, mainly due to gas- and energy-intensive industries, including oil refineries and fertilizer production.
Black Sea
Attention should be drawn to one Balkan country – Bulgaria, where the week leading up to Easter brought positive news: the signing of a contract between the government and Shell for the exploration and subsequent extraction of oil and natural gas beneath Bulgaria's Black Sea waters, specifically at the 'Khan Tervel' structures.
The idea of Bulgaria extracting natural gas from the Black Sea floor is not new: as early as 2012, the companies OMV, Total, and Repsol began exploring for oil and gas at the Khan Asparuh block in Bulgaria's exclusive economic zone, as well as at two other Bulgarian blocks – 'Khan Kubrat' and 'Teres.' Turkey is already extracting natural gas from the seabed, and Romania expects to achieve the same by 2027.
Three years ago, the former Prime Minister of Turkey, according to Bulgarian sources, made a bold statement claiming that the energy reserves in the Black Sea could cover global gas consumption for 45 years. This is likely a strong exaggeration, but even if it proves true to just 1%, it would resolve the energy issues for at least the countries in the Black Sea region.
The issue is not only about the potential of the Black Sea — it is high time to lift the 'aged' moratorium on shale gas exploration and extraction, imposed in 2012, primarily due to concerns that hydraulic fracturing ('fracking') technology pollutes the environment. However, there are alternative exploration technologies — seismic surveys using remote sensing methods.
Bulgaria should also continue to develop its nuclear energy sector. Additionally, it must continue to protect its coal capacities from the encroachments of short-sighted Brussels bureaucrats.
In Bulgaria's energy mix for 2022, coal-fired thermal power plants predominated, generating nearly 60% of the country's electricity. Incidentally, global demand for coal is rising. Another third of electricity was provided by the Kozloduy Nuclear Power Plant. Bulgaria plans to bring the 7th and 8th reactors into operation. Considering France's experience, where the 2022-2023 crisis was mitigated through the use of nuclear energy, and the new capacities being developed in Turkey, the southeastern part of the EU may consider expanding nuclear power capacity, which is likely to provoke strong protests from environmentalists.
The paradox is that new (rather than replacement) energy capacities may be required if electric vehicles gain widespread adoption.
Against the backdrop of declining domestic production and the phasing out of Russian gas, the European Union's energy system is becoming increasingly vulnerable and dependent on imports from the United States, Qatar, Azerbaijan, and Algeria. As a result, the possibility of producing both hydrocarbons and associated renewable energy sources domestically is being considered, along with the development of new energy networks such as the 'Green Corridor' — a project aimed at exporting clean energy from Central Asian countries and Azerbaijan through Georgia to Romania, and further into the central part of the EU. This is a unique, internally diversified project, where energy sources are stable (due to consistent sunlight and prevailing winds) and competitive with one another, perfectly aligning with the EU's priority funding programs.
Such projects, along with the expansion of domestic hydrocarbon production, are designed to compensate for Germany's 2011 phase-out of nuclear energy, improve the competitiveness of the economy, and lead the EU, as well as other countries, toward an environmentally sustainable balance. This will also serve as a practical example for China, India, and the United States in terms of phasing out carbon emissions.
It is precisely integrated energy sources (their legal support, risk protection, and incentivization) that will allow us to save the planet from emissions and balance trade and economic growth. In this case, the 'wolves' (markets) will be satisfied, and the 'sheep' (nature) will remain intact.
