Title: European Gas Watch Consumption and Supply Database
URL: http://www20.cera.com/eprofile?u=35&m=2387



The Fundamentals--Demand Influenced by Power Prices?

The outturn of demand for gas in OECD Europe in 2000 was 484.6 Bcm (billion
cubic meters), 2.0 percent above the previous year's level of 441.1 Bcm. This
was a strong performance, supported by continued switching to gas in power
generation in Italy and Spain. But despite the relatively strong performance,
several countries recorded a decline--Germany and Netherlands in particular. Gas demand appears to have declined in countries where power prices are low.
Companies shut-in production of electricity by cogeneration and bought from the
grid, decreasing overall gas demand. Electricity trade increased between
Germany and the Netherlands, with low electricity prices in Germany lowering
overall electricity production from gas in the Netherlands. The total quarter-
on-quarter growth in the third and fourth quarters was due entirely to the
underlying increase in demand for gas for power generation.

Residential--First quarter demand was strong with colder weather over the same
period in 1999. Temperatures were high in the fourth quarter, dampening
residential demand. The continued increase in connections to the grid in most
of Europe maintained residential, commercial, and small industrial consumption
despite some warm weather patches throughout the winter.

Industrial--Industrial demand was strong throughout the year, particularly in
countries with strong economic growth during 2000--France, Spain, and Belgium.

Power generation--Dry weather in the first quarter of 2000 led to an increased
use of gas in power generation switching from hydropower. However, in some
countries--Italy, for example--wet weather increased hydro output, decreasing gas demand in the fourth quarter. Overall fourth quarter demand in the power
generation sector was sustained by incremental new, gasfired capacity that had
come onstream.

**end**

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E-mail Category: Report
CERA Knowledge Area(s): European Gas,

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