The combination of the pandemic and an exceptionally mild winter in the northern hemisphere have put global demand for natural gas on course for its largest annual decline in history, the International Energy Agency said today in a new report.
Global gas demand is expected to fall by 4%, or 150 billion cubic metres (bcm) – twice the size of the drop following the 2008 global financial crisis.
As of early June, all major gas markets worldwide are experiencing falls in demand or slumps in growth, according to the IEA's latest annual market report. Markets across Europe, North America and Asia are forecast to see the biggest drops, accounting for 75% of the total decline in gas demand in 2020.
"Natural gas has so far experienced a less severe impact than oil and coal, but it is 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," said Dr Fatih Birol, the IEA's Executive Director.
Global oversupply is pushing major natural gas indices to record lows, while the oil and gas industry is cutting spending and postponing investment decisions to make up for the significant shortfall in revenue. Although a rebound is expected in 2021, the IEA report does not assume a rapid return to the pre-crisis trajectory.
"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," Dr Birol said. "The Covid-19 crisis will have a lasting impact on future market developments, dampening growth rates and increasing uncertainties."