Global gas demand set for record decline in 2020
Global demand for natural gas is set for its biggest fall on record, the International Energy Agency revealed today, due to the combination of the coronavirus crisis and a particularly mild winter.
This year, gas demand is due to drop four per cent – or 150bn cubic metres – which is double the size of the fall that followed the global financial crisis.
As has been seen in global oil markets, flatlining demand due to coronavirus lockdowns and stalled economic activity have sent gas prices plummeting.
IEA executive director Dr Fatih Birol said that although gas had been less severely impacted than oil, it was “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”, he added.
Although demand is set to come back in 2021, the IEA is not predicting a swift return to pre-coronavirus levels.
“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,” Birol said.
“The Covid-19 crisis will have a lasting impact on future market developments, dampening growth rates and increasing uncertainties”.
The majority of the decline will be seen in mature markets across North America, Europe and Asia, which account for 75 per cent of the demand fall.
After 2021, most of the increase in demand takes place in emerging Asia, led by China and India where gas benefits from strong policy support.
Over the next five years, however, the coronavirus crisis will lead to 75bn cubic metres of lost gas demand, the same as the increase recorded in 2019.