Europe's Natural Gas Demand Falls on Industrial Cutbacks

BRUSSELS (Reuters) - Europe slashed its gas use in August and September as industries cut production in response to soaring prices and scarce Russian supply, although the cuts were unevenly spread between countries.

An LNG import and regasification facility in Italy. (photo: SNAM)

Overall gas use in the 27-nation European Union plunged by 14% in August compared with the five-year average for the month, and by 15% in September, according to the latest data from EU statistics office Eurostat.

With little call on gas-fueled heating over the summer, the curbs were delivered by industry and, in some cases, the electricity sector as gas prices hit record highs, driven by Russia's move to cut supplies to Europe following its invasion of Ukraine.

"That is really industries shutting down or significantly reducing their gas use," said Simone Tagliapietra, senior fellow at think-tank Bruegel, adding that the lasting impact of such closures on Europe's industrial base was not yet clear.

High gas prices have led to temporary closures of steelworks, smelters and cement manufacturers across the EU in recent months. Europe's fertilizer producers curtailed more than 70% of their capacity in August.

EU countries agreed in July to voluntarily cut their gas demand by 15% from August, as they raced to fill gas storage and save fuel for a winter of scarce Russian supplies.

With EU gas storage now 94% full, and temperatures unusually mild, gas prices have fallen in recent weeks although they remain higher than a year ago.

The recent drop in gas use was unevenly spread between countries, with a few even increasing their consumption.

Germany, Europe's biggest gas user and industrial powerhouse, cut its gas consumption by 28% in August and 7.4% in September, while Italian gas use dropped by 22% in September and Dutch gas use by nearly a third.

Spanish gas use rose slightly in both months. While industrial consumption fell in September, power sector gas consumption increased, according to Bruegel data - which the think-tank attributed to an effort in Spain and Portugal to cap gas prices. A drought also depleted Spain's hydro-power output, increasing the call on gas power plants.

(Reporting by Kate Abnett; Editing by Paul Simao)

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