The International Energy Agency in its latest annual market report has revealed that global gas demand in 2020 is set to fall by twice the amount lost after the 2008 financial crisis.
The combination of the COVID-19 crisis and an exceptionally mild winter in the northern hemisphere have put global demand for natural gas on course for its largest annual decline in history, says the report titled ‘Gas 2020’.
Global gas demand is expected to fall by four percent, or 150 billion cubic metres (bcm) – twice the size of the drop following the 2008 global financial crisis.
As of early June, all major gas markets worldwide are experiencing falls in demand or slumps in growth, according to the IEA report.
For the full year, more mature markets across Europe, North America and Asia are forecast to see the biggest drops, accounting for 75 percent of the total decline in gas demand in 2020.
“Natural gas has so far experienced a less severe impact than oil and coal, but it is far from immune from the current crisis. The record decline this year represents a dramatic change of circumstances for an industry that had become used to strong increases in demand,” said Dr Fatih Birol, the IEA’s Executive Director.
A rebound is expected in 2021 and the IEA report does not assume a rapid return to the pre-crisis trajectory.
“Global gas demand is expected to gradually recover in the next two years, but this does not mean it will quickly go back to business as usual,” Dr Birol said.
“The COVID-19 crisis will have a lasting impact on future market developments, dampening growth rates and increasing uncertainties.”
After 2021, most of the increase in demand is to take place in emerging Asia, led by China and India where gas benefits from strong policy support.
In both countries, the industrial sector is the main source of demand growth, making it highly dependent on the pace of the recovery in domestic and export markets for industrial goods.
Liquefied natural gas, LNG, is set to remain the main driver of the international gas trade. Slower growth in global gas demand in the coming years is likely to result in capacity outpacing LNG imports through 2025, limiting the risk of a tight LNG market for the time being.
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