BAKU, Azerbaijan, Jan.27
By Leman Zeynalova – Trend:
Global natural gas demand is expected to grow 2.8 percent in 2021 (about 110 bcm), slightly above the 2020 decline, thus enabling a recovery to the 2019 level, Trend reports citing the International Energy Agency (IEA).
This is a far cry from the 7.5 percent y-o-y post-2009 financial crisis rebound observed in 2010, IEA said in its Gas Market Report.
The agency said this projection comes with two main caveats:
All regions are not equal when it comes to gas market recovery. Mature markets bore the brunt of demand drop in 2020, while emerging markets will be the main drivers of demand growth in 2021. Fast-growing markets in Africa, Asia, Central and South America and the Middle East are projected to account for about 70% of global demand growth in 2021. Mature markets are likely to see a more gradual recovery though some may remain below their 2019 demand levels.
The sectoral pillars of growth are all subject to major uncertainties. Gas burn in power generation is expected to be hampered by slow electricity demand growth and increasing inter-fuel competition as gas prices recover from their 2020 lows. Gas consumption in the industry is strongly dependent on economic recovery, especially for Asia’s export-driven industries. Residential demand received support from cold temperatures so far, but would be negatively impacted in case of a return to milder weather conditions.
However, IEA believes that global gas demand recovery in 2021 is uncertain.
Demand is subject to a variety of risk factors including fuel switching, slow industrial rebound and mild weather which can moderate consumption.
Global gas demand fell by an estimated 2.5 percent or 100 billion cubic metres (bcm) in 2020 – its largest drop on record. Amid this slowdown, gas demand for power generation remained resilient owing to fuel switching, while the whole supply chain showed strong flexibility in adjusting to demand variations. Gas trade globalisation progressed with increasing liquidity, while prices experienced historical lows and extreme volatility. The Covid-19 crisis and a well-supplied market put investment on hold, whereas gas market reforms and clean gas policy initiatives gained momentum in major consuming markets.
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