Highlights

  • Demand will continue to rise on an annual basis as the region enters spring
  • European production is continuing to fall year on year
  • Net injections into storage are being seen in some markets
  • A mild start to spring has weighed on regional hub prices

Economic overview

The eurozone is still expected to achieve economic growth this year, but uncertainty regarding Greece remains a threat to the region’s economic stability.

Negotiations on Greece’s future economic strategy and financing are ongoing. Greece made a €450 million ($481 million) loan repayment to the IMF in April and is due to pay a further €747 million in May. However, Athens could run out of money and still needs to agree longer-term financing with its partners in the eurozone. Its position as a eurozone member therefore remains uncertain, presenting a risk to regional growth. Gas demand in Europe has been rising on an annual basis so far this year, but market expansion will be tempered if the region suffers an economic setback.

GDP forecast - Europe

  2013 2014 2015 2016
France 0.4% 0.4% 0.8% 1.5%
Germany 0.2% 1.5% 1.1% 1.8%
Greece -4.0% 0.8% 2.3% 3.3%
Italy -1.9% -0.4% 0.2% 1.0%
Netherlands -0.7% 0.8% 1.4% 1.6%
Spain -1.2% 1.3% 1.7% 1.9%
United Kingdom 1.7% 3.0% 2.7% 2.5%
Euro area -0.4% 0.8% 1.1% 1.7%
Source: OECD

The UK is facing a general election on 7 May, and if the Conservative Party retains power a referendum on the UK’s membership of the EU will be held in 2017. Until the outcome of the election is known, uncertainty regarding the UK’s future in Europe will persist. And if the Conservatives do win, the uncertainty will continue for the next two years.

The UK election will be one of the most closely fought in recent years. Energy policy – and specifically policies affecting gas – could change depending on the outcome of the contest. While the newly introduced upstream tax breaks are unlikely to be altered, the pace of development for shale gas could slow if a Labour government is elected.