Despite some uptick in consumption in recent months, the world’s demand for natural gas is still set to see its biggest drop on record in 2020, the International Energy Agency (IEA) said on Monday.
According to the agency’s new report, Global Gas Security Review 2020, global natural gas demand is set to decline by 3 percent, or by 120 billion cubic meters (bcm), this year, the largest drop ever.
Four months ago, the IEA had forecast that natural gas demand would drop by 4 percent year on year in 2020, or by 150 billion cubic meters. This would represent twice the amount of demand lost after the 2008 financial crisis, the IEA said back then. Gas demand in all regions will be hit, but the biggest impact will be felt in mature markets across Europe, North America, Asia, and Eurasia which together will account for about 75 percent of lost gas consumption this year, the IEA said.
Now the Paris-based revised up its demand outlook for this year, but it still expects a drop that would be the largest decline in history of global gas markets.
“In spite of this revision, 2020 is still assumed to experience the largest recorded drop in global natural gas,” the IEA said.
Next year, natural gas demand is set to increase by 3 percent compared to 2020, but increased uncertainties cloud the outlook, according to the agency.
“The resurgence of Covid-19 cases and the prospect of a prolonged pandemic brings further uncertainty to the pace of recovery in 2021, which has led to a downward adjustment from the previous report. The recovery of global gas demand in 2021 is likely to be supported by fast-growing markets in Asia, Africa and the Middle East,” the IEA said.
Recovery is set to be slower in more mature markets, which may not see demand returning to the pre-COVID-19 levels until 2022 or later, the agency warned.
“Global gas demand has been progressively recovering since June, driven mainly by emerging markets,” IEA’s Executive Director Fatih Birol said in a statement.
“However, this does not mean a return to business as usual, as the current crisis could have long-lasting repercussions,” Birol added.