Beijing: The International Energy Agency (IEA) issued a report on Tuesday warning that the economic recovery in China would lead to fierce competition on international energy markets and could result in a return of "unsustainable" natural gas prices in the EU.

According to IEA research, China saw a decline in petrol consumption last year as a result of lower industrial output, sluggish economic expansion, Covid-related restrictions, and rising energy prices.

A record-breaking influx of liquefied natural gas (LNG), adequate gas stocks, and mild winter weather in Europe all contributed to the EU authorities taking energy-saving measures and getting through the winter.

Also Read: G20 Meet in Ranchi To Deliberate Critical Area of Energy

Unprecedented price increases resulted in a 13% decrease in Europe's petrol demand, according to the IEA, as governments swiftly implemented emergency policies, businesses reduced production, and consumers lowered thermostats.

After Russia cut back on supplies due to Western sanctions, LNG became the primary replacement for Russian gas in the EU. According to the report, the value of global LNG trade reached an all-time high in 2022, doubling to $450 billion from the previous year. With a 63% increase in cargoes last year, the European Union was the main cause of the surge in LNG demand.

Also Read: India's real GDP growth projections revised: Moody's

The IEA issues a warning that even though natural gas prices have decreased recently after surging last year, this could change in 2023 as LNG demand increases in Asia, particularly in China, after Beijing lifted Covid restrictions.

The researchers project that China's LNG demand could increase by 10% this year, but they emphasise that these projections are still very tentative. The IEA estimates that a new surge in demand in the Asian nation could reach 35% if prices keep falling and the economy as a whole quickly recovers.

In 2023, China will be the great unknown. Keisuke Sadamori, the IEA's Director of Energy Markets and Security, predicted that if global LNG demand rises to pre-crisis levels, it will only increase competition on international markets and inevitably drive prices up once more.

Also Read: India's April-Jan fiscal deficit looms large on-year to Rs 11.91-LaCr

He continued by saying that this scenario, along with the potential for further Russian petrol supply cuts, would be concerning, particularly for consumers in the EU.