Global gas demand is expected to fall by 4%, or 150 billion cubic meters (bcm) – twice the size of the drop following the 2008 global financial crisis, according to the International Energy Agency report on Wednesday.
According to IEA’s latest annual market report Gas 2020, the novel coronavirus (Covid-19) pandemic and a mild winter in the northern hemisphere have delivered a historic shock to the global natural gas market.
According to the IEA data, as of early June, all major gas markets worldwide are experiencing falls in demand or slumps in growth.
"For the full year, more mature 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," the agency said.
In addition, 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 the report underlined that a rebound is expected in 2021, the report does not assume a rapid return to the pre-crisis trajectory.
According to the report, new production and infrastructure projects are likely to come online amid growth trends that are markedly below earlier expectations.
- Dramatic change in industry
Commenting on the recent IEA report, IEA’s Executive Director Fatih Birol stated that 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," he added.
He also stated that 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.
Birol said the Covid-19 crisis will have a lasting impact on future market developments, dampening growth rates and increasing uncertainties.
By Gulsen Cagatay and Nuran Erkul Kaya