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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Global Natural Gas Demand Set To Rebound After Pandemic Shock


Natural gas demand in the world saw its largest drop on record last year as COVID-19 reduced economic activity and upended all previous forecasts for continuous growth in global gas consumption.

Even if it was the largest decline on record, natural gas demand still fell less than demand for other fuels, most notably oil. Gas demand dropped by 2.5 percent in 2020 compared to 2019, for the first significant setback in consumption since the 2008-2009 financial crisis.

Gas Demand To Recover Quicker Than Oil

But unlike oil, gas consumption is set to recoup this year all the losses from 2020, as it will grow by 2.8 percent year over year and return to the levels from before the pandemic, the International Energy Agency (IEA) said in its new Q1 quarterly report with forecasts for the near term.

In comparison, the same agency’s latest estimates point to global oil demand recovering by 5.5 million bpd to 96.6 million bpd in 2021, following an unprecedented collapse of 8.8 million bpd last year.

Recovering to the 100 million bpd demand that we saw in 2019 won’t happen until 2022 at the earliest.

Gas demand in 2020 was more resilient than oil thanks to the swift rebound in the Chinese economy in 2020 after the early-year COVID shock, low liquefied natural gas (LNG) prices in the spring and summer that incentivized price-sensitive buyers to stock up, and the coal-to-gas switch in Asia. All these factors prevented global gas demand from falling too low last year.

This year, gas consumption is set for a full recovery to 2019 levels, the IEA said in its Gas Market Report, Q1-2021. This projection comes with the caveat that uncertainties on the global energy markets continue to be high, especially in terms of the pace of global economic recovery, which will determine gas consumption in industry, specifically for the export-driven industries in Asia. Related: The 5 Best Utility Stocks In 2021

Another caveat in the IEA’s 2021 gas demand forecast is that various regions will recover at a different pace. Emerging markets in Asia, Africa, Central and South America, and the Middle East are set to represent around 70 percent of global gas demand growth this year, while the recovery in mature markets will be more gradual and some of them will still see demand below 2019 levels.

LNG Trade Growth To Accelerate In Increasingly Liquid Gas Market

Gas demand dropped globally last year, but LNG trade continued to grow, although at a slower pace than in previous years. In 2021, LNG trade is expected to return with a bang, while short-term and spot deals are further set to raise their share in overall global LNG trade.

In 2020, the volume of LNG traded under spot and short-term deals continued to rise, by 8 percent, the IEA said, citing preliminary shipping data. Spot and short-term LNG contracts accounted for 37 percent of global LNG trade, its highest share on record. Thus, despite an overall drop in gas demand last year, the market became more liquid, the IEA says.

Total LNG trade this year is expected to increase by 6 percent annually, to reach 375 million metric tons, compared to the pandemic-hit slim 0.9-percent growth from last year, Fauziah Marzuki, head of LNG, said in BloombergNEF’s ‘10 Predictions For 2021’ report.

Despite widespread lockdowns last year, global LNG imports rose to 363 million tons, Rystad Energy said in a report this month. LNG demand in Asia increased by 4 percent annually in 2020, mostly driven by China.

Global LNG imports are set to more than double by 2040, to 736 million tons, with Asia driving the surge, according to Rystad Energy.

LNG spot prices have eased from the record-high seen earlier this month, as the cold snap in Asia ended.

“Winter spot demand in Asia evaporates quickly in March-April, and forward prices are already falling quickly,” Gavin Thompson, Vice Chairman, Energy – Asia Pacific at Wood Mackenzie, wrote in a post last week. Related: The Surprising Rise And Fall Of A Shale Superstar

Yet, low inventory levels after winter ends are set to support prices, as well as demand, as North Asia and Europe will look to refill gas storage.

“At the same time, expectations of higher coal and European carbon prices, also partially driven by the current cold spell, provide headroom for higher European summer gas demand,” Thompson said.

Spotlight On Environmental Credentials Of Natural Gas  

While this year will see LNG trade and demand further accelerating, it will also put the spotlight on the environmental impact of LNG and other natural gas projects.


According to Rystad Energy, global gas demand will jump by 26 percent through 2040, driven by Asia, but environmental policies in Europe and the growth in renewables will lead to a decline in demand from 2024 onwards. Europe is set to lose 43 Bcm of gas demand by 2040 compared to 2020 levels.

Demand in the United States “is also at risk” due to new environmental policies being rolled out by the Biden Administration every day, Rystad Energy said.

This year, the market and analysts will expect to see what future natural gas will hold in the energy transition.  

After years of being touted as the ‘bridge fuel’ from more carbon-intensive electricity generation to renewable power, natural gas is now under scrutiny with policymakers, especially in Europe, for its methane emissions, which are much more harmful than carbon dioxide emissions. 

“Policy makers will need to provide clarity on decarbonisation plans, including how they see the role of natural gas, following pledges to achieve climate neutrality,” Wood Mackenzie vice president Massimo Di Odoardo says, noting that “Decarbonising natural gas will become a strategic priority for the gas industry.”

By Tsvetana Paraskova for Oilprice.com

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Leave a comment
  • George Doolittle on January 28 2021 said:
    There was nary a pause in US natural gas activity as a result of "The Global Pandemic" and I would argue the exact opposite has been the case as US exports from Mexico via Sempra Energy look set to become realized.

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