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Natural gas to increase its share to 28 percent in 2050 - GECF

Oil&Gas Materials 18 February 2021 10:23
Natural gas to increase its share to 28 percent in 2050 - GECF

BAKU, Azerbaijan, Feb.18

By Leman Zeynalova – Trend:

Gas Exporting Countries Forum (GECF) forecasts global primary energy demand to expand by 24 percent by 2050, Trend reports citing the organization.

This is based on the revised GDP growth expectations related to COVID-19 economic contractions.

GECF underscores the importance of fair value for natural gas to ensure sufficient investments through the entire gas value-chain and the necessity for equitable risk-sharing among all gas market stakeholders to sustain the security of demand and natural gas supply.

“It is too early to write off hydrocarbons. They will remain the dominating source in the global energy mix for the foreseeable future. Natural gas will even increase its share from 23 percent today to 28 percent in 2050,” said GECF.

For 2021, it is forecast that global gas production will recover based on two different scenarios, according to GECF.

In the optimistic scenario, if the restrictions are relaxed and prices rebound in the first half of 2021, production will recover to the 2019 level. However, in the pessimistic scenario, if restrictions are extended through the first half of 2021, production will stagnate in the first half, and growth will resume in the second half of 2021. Therefore, production will recover to the 2019 level only in 2022. With a post-COVID gradual lifting of restrictions, global natural gas production is expected to grow, driven by North America (U.S.), Middle East, CIS (Russia) and Africa.

Regarding non-GECF countries' natural gas production, it is expected that the U.S. will take the lead in deploying its natural gas resources, given the abundance of shale gas reserves, effective energy policy mechanisms, and fiscal policies.

Based on pre-COVID-19 estimates, global natural gas supply was forecast to grow by 2-2.5% in 2020. However, due to the pandemic, and lower demand and low prices of natural gas, the estimate has now been revised down. In order to estimate natural gas supply in 2020 and 2021, in addition to the resurgence of COVID-19 in major producing and consuming countries such as the U.S., the estimates are based on prolonged weak demand due to COVID-19 lockdown measures. Based on the post-COVID scenario, it is assumed that the pandemic will have a negative impact on upstream activities with global gas production set to decline in 2020 compared to 2019. This is due to lower prices of natural gas and also the negative impacts of COVID-19 on global demand for natural gas. In the case of a prolonged COVID-19 pandemic or resurgence of the pandemic, the negative effect of COVID-19 is expected to be more severe on upstream activities.

Accordingly, in the post-COVID scenario, it is estimated that global natural gas production will contract by 2-4 percent in 2020. Because demand is also a constraint for natural gas production, a more marked decline in natural gas demand will result in a more severe drop in natural gas production in 2020 as a result of the COVID-19 pandemic.

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