BAKU, Azerbaijan, June 10
By Leman Zeynalova – Trend:
Global natural gas demand could fall by about 150 bcm/y or 4 percent y-o-y in 2020, Trend reports citing the International Energy Agency (IEA).
The decline in demand has been revised from the initial 5 percent estimate published in the Global Energy Review 2020 report, and is based on revised Q1 data and market observations from the two first months of Q2, IEA said in its report.
“The magnitude of the impact remains however unprecedented: this would be the largest recorded annual decrease in consumption since the natural gas market developed at scale in the second half of the 20th century, and the drop would be twice bigger than the latest downturn in 2009, when natural gas demand fell by 2 percent,” reads the report.
Natural gas consumption is expected to fall in every sector and region in 2020, but most of the declines are in mature markets and power generation, according to the IEA.
IEA believes that geographically, the bulk of consumption decline is expected in mature markets across Europe, North America, Eurasia and Asia, which would together account for 75 percent of total demand loss in 2020.
“These markets concentrate most of the loss in residential and commercial consumption, resulting from the joint impact of lower space heating needs in the first months of the year, followed by the implementation of lockdowns weighting on consumption from the commercial sector. Gas-fired generation is particularly hit in Europe, squeezed in between lower electricity demand and growing renewable output,” reads the report.
These include among other higher fuel switching in power generation and greater resilience of industry consumption in the United States, a lesser than expected impact on European total is less important in emerging markets, due to the lower share of natural gas in power generation (apart from the Middle East) and marginal role of space-heating use, said IEA.
“Sector wise, our projection sees consumption for power generation drop by around 5 percent y-o-y, accounting for half of the decrease in global demand. Gas use in the residential and commercial sector falls by close to 4 percent globally – mainly in the abovementioned mature markets – and accounts for 20 percent of total consumption loss. The industrial sector also accounts for close to 20 percent of the global decrease, dropping by about 4 percent y-o-y in 2020,” reads the report.
In addition to the direct impact of reduced activity during lockdowns, natural gas demand from industry is further dampened by the slowdown in consumer spending for manufactured goods, which affects gas use in export-driven economies (especially in Asia), according to the agency.
“The energy sector itself accounts for around 10 percent of the fall in global gas demand, dropping by 4 percent y-o-y. This reflects the overall decline in global supply, which reduces gas needs for upstream operations, as well as for energy transformation (refining) and transportation (pipeline gas compression).”
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