https://www.engineeringnews.co.za
boilers|Coal|Cutting|Energy|Export|Gas|Industrial|Oil And Gas|Oil-and-gas|Power|Trucks|Power Generation|Power-generation
boilers|Coal|Cutting|Energy|Export|Gas|Industrial|Oil And Gas|Oil-and-gas|Power|Trucks|Power Generation|Power-generation
boilers|coal|cutting|energy|export|gas|industrial|oil-and-gas|oilandgas|power|trucks|power-generation|power-generation-industry-term

Gas market suffers from uncertainties, but demand growth expected in China, India

10th June 2020

By: Marleny Arnoldi

Deputy Editor Online

     

Font size: - +

The International Energy Agency (IEA) says natural gas markets will this year experience its biggest demand shock ever, as Covid-19 had hit at a time when gas demand had already been decreasing.

Gas consumption is expected to fall by 4% this year, under the successive impacts of lower heating demand from “warm” winters in the northern hemisphere early in the year, followed by the implementation of lockdown measures in nearly all countries and a lower level of activity caused by the pandemic-induced macroeconomic crisis.

The IEA says that, in being faced with this unprecedented shock, natural gas markets are going through strong supply and trade adjustments, resulting in historically low spot prices and high volatility.

Natural gas demand is, however, expected to progressively recover in 2021, but the Covid-19 crisis will have longer-lasting impacts on natural gas markets, as the main medium-term drivers are subject to high levels of uncertainty.

The agency adds that it is also not guaranteed that natural gas demand will return to pre-crisis levels.

All regions are being impacted on, with mature markets across Europe, North America, Asia and Eurasia together accounting for 75% of lost gas consumption this year.

The IEA points out that Europe has been the hardest hit natural gas market, with a 7% year-on-year decline so far this year.

Natural gas consumption grew by about 70-billion cubic metres in 2019, or 1.8% year-on-year, which was largely owing to the switch from coal to natural gas.

“The global oversupply is pushing major natural gas spot indices to historic lows, while the oil and gas industry is cutting spending and postponing or cancelling some investment decisions to make up for the severe shortfall in revenue,” the IEA explains.

In terms of different sectors, power generation has been hardest hit by lower natural gas demand, making up half of the total demand decline, followed by the residential and commercial sector, and thereafter the industrial sector.

The agency notes that the crisis is likely to result in 75-billion cubic metres of lost annual demand by 2025, when looking at an initial forecast of the IEA of 4.37-trillion cubic metres of annual natural gas demand by 2025.

It initially forecast a growth rate for natural gas demand at 1.8% a year from 2019 to 2025, but this has been revised to a 1.5% a year growth rate.

Looking ahead, the IEA says most of the post-2021 growth is set to take place in Asia, led by China and India where gas benefits from strong policy support.

In both those countries, the industrial sector is the main source of demand growth, making it highly dependent on the pace of the recovery in domestic and export markets for industrial goods.

China is set to add more than 130-billion cubic metres a year of incremental gas demand between 2019 and 2025, led by its industrial sector.

The IEA explains that China’s energy-intensive heavy industries present many fuel-switching opportunities from coal to gas, while the industrial sector also has a growing profile of light industries, where gas is already cost-competitive with liquid fuels.

Additionally, the country's continuous mitigation of air pollution will see more coal-fired industrial boilers converted and demand will be further driven by the country’s expanding fleet of liquid natural gas-fuelled trucks.

In India, the government has stated its ambition to build a gas-based economy and increase the share of natural gas in its primary energy mix to 15% by 2030, from 6% currently.

The IEA says India should emerge as a primary driver of growth in gas demand in Asia, with an estimated 28-billion cubic metres a year added to its total consumption between 2019 and 2025.

The country’s industrial sector represents 36% of the growth over the period, while an expansion of India’s pipeline network will enable greater gas use also in the residential sector.

The ongoing roll out of city gas distribution networks in India is targeting more than 35-million additional household connections and more than 7 000 new compressed natural gas filling stations by 2029.

“Liquefied natural gas is expected to remain the main driver behind global gas trade growth, but it faces the risk of prolonged overcapacity as the build-up in new export capacity from past investment decisions outpaces slower than expected demand growth,” the IEA says.

The agency adds that mature markets in Europe, Eurasia and North America, which were hit hard this year, will recover most of their consumption losses in 2021, as demand from the industrial and power generation sectors gradually returns.

Some marginal gains are also expected from more coal-to-gas switching, helped by low gas prices and ample supply. This while residential heating demand is assumed to return to normal after the exceptionally mild northern hemisphere winter early in 2020.

North American gas consumption is set to only grow at 0.4% a year from 2019 to 2025, while European gas demand is expected to remain stable through the forecast period. Natural gas demand in Eurasia is likely to grow by 0.5% a year over the period, limited by the modest economic growth prospects of the region.

The IEA further forecasts that Central and South American gas demand will increase by a yearly rate of 0.6% between 2019 to 2025, while African natural gas consumption will grow at an average rate of 3.3% a year to reach almost 195-billion cubic metres by 2025.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

Showroom

Actom image
Actom

Your one-stop global energy-solution partner

VISIT SHOWROOM 
Multotec
Multotec

Multotec, recognised industry leaders in metallurgy and process engineering help mining houses across the world process minerals more efficiently,...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Photo of Martin Creamer
On-The-Air (15/03/2024)
15th March 2024 By: Martin Creamer

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.096 0.146s - 174pq - 2rq
Subscribe Now