Global Gas Demand to Fall in 2020: Rystad
Global demand for natural gas is expected to fall by about 2% this year in response to lockdowns imposed to limit the spread of Covid-19, Norwegian consultancy Rystad Energy said in a May 18 report.
In absolute terms, global gas demand this year is expected to total close to 3.88 trillion m3, down from 3.95 trillion m3 last year and short of Rystad’s pre-pandemic forecast of 4.04 trillion m3.
“2020 will be the first year since 2009 [when] there will be no growth in consumption,” said Carlos Torres-Diaz, Rystad’s head of gas and power markets. “This will be a hard blow for an industry accustomed to yearly growth rates of more than 3%.”
The expected drop in gas demand falls well short of the 20-30% decline experienced in the crude oil and refined products sector. Low gas prices, Rystad said, are shielding gas demand to some extent as the fuel remains more competitive than other sources of energy, especially in the power generating sector. Gas also has few competitors in most countries as a source of heat in winter.
In Italy, for example, where strict lockdowns were imposed in early March, gas demand from the power and industrial sectors is off about 23%, Rystad said. Other European countries have seen similar declines: weather adjusted demand is off about 25% in France and 19% in the UK, according to the International Energy Agency.
In the US, however, demand continues strong as increasing gas use in the power sector has offset lower industrial consumption. Demand from the power sector has averaged about 25bn ft3/day (708mn m3/day) over the last two weeks, in line with last year’s level.
And there have been periods during the current US lockdown in which gas demand has been as much as 15% higher than a year ago, largely as gas has pushed more expensive coal out of the generation stack.