2021 to see over 3% increase in global gas demand

Oil&Gas Materials 16 April 2021 11:55 (UTC +04:00)
2021 to see over 3% increase in global gas demand

BAKU, Azerbaijan, Apr.16

By Leman Zeynalova – Trend:

2021 is anticipated to see a 3.2 percent year-on-year increase in global gas demand (about 125 bcm), Trend reports citing the International Energy Agency (IEA).

“On this basis the recovery would offset losses seen in 2020 and even result in some net growth above 2019 levels. However, as mentioned in our previous quarterly report, this is likely to be a fragile and rather asymmetric recovery, as sectors and regions that have suffered the largest losses may not see the biggest gains. Moreover, the prospect of a prolonged impact of the pandemic on the global economy adds further uncertainty to the pace of short-term gas demand growth,” reads the IEA report.

Consumption in the industrial sector, which remained resilient in 2020 with an estimated 1.2 percent annual decline, is expected to take the lead in 2021 with 5.4 percent year-on-year growth (close to 55 bcm). China, India and emerging Asian markets are set to be the main drivers behind this increase. Higher gas demand from industrial buyers hinges on a consumption rebound in both these large Asian economies and their main export markets.

The IMF World Economic Outlook in April 2021 projects annual growth of 6 percent in global output and 8.4 percent in trade volume. Gas demand from the power generation sector is facing a more challenging environment. Gas consumption for power generation was already the most affected segment in 2020, accounting for an estimated 45 percent of the total annual decline, despite favorable fuel switching dynamics in North America and Europe.

2021 is expected to see limited growth in electricity demand, strong competition from increasing renewable capacity and lower cost-competitiveness against coal as natural gas prices recover from their 2020 lows. This forecast therefore expects a 1.2 percent increase in natural gas for power burn in 2021, not sufficient to offset the estimated 2.1 percent year-on-year drop seen in 2020. A cold start to 2021 provided support for heating demand after a tough year for gas demand in the residential and commercial sectors, which fell by 2.4 percent year-on-year in 2020. This reflected the joint impacts of unusually mild winter temperatures for residential and widespread lockdowns for commercial. The return to more average winter temperatures and retail activity, together with the expansion of gas connections in China, support a strong 4.9 percent anticipated increase in gas demand for 2021.


Follow the author on Twitter: @Lyaman_Zeyn