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GAS 2020

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Natural gas demand – from cool down to meltdown

y-o-y demand growth

Global natural gas demand growth, 2016-20
6%

4%
2%
0%
-2%-4%-6%

2016

2017

2018

2019

2020

After three consecutive years of strong gains, natural gas demand growth slowed down in 2019 and is
expected to experience its largest recorded drop this year
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Gas demand decline already started before the Covid-19 outbreakYear-on-year change in gas demand for a selection of major markets, 2019-20
20%
15%
10%
5%0%-5%-10%JanFebUnited StatesMarEuropeChinaAprJapan (imports)

MayIndia

The Covid-19 crisis hit an already weak gas demand at the end of an exceptionally mild winter formature markets, while emerging markets were impacted later with the implementation of lockdowns
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The impact of lower demand is not (yet) fully visible in supply

bcm

Monthly evolution of major natural gas supply indicators, 2018-20 and 5-year range
US dry gas production

Russian dry gas production

90808070706060505040403030
2020

101000JanMarMay
5-year range

JanMarMay2018

Global LNG trade

European gas imports*

5050

40403030

2020

101000JanMar2019

MayJanMarMay2020* including Norwegian pipeline gas flows to the United Kingdom and continental Europe

US production and LNG trade are still showing some growth over last year, but monthly volumes slowly
converge to their 2019 levels.
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Global gas benchmark prices are searching for new lows

USD/MBtu

Natural gas spot prices in the US, Europe and Asia, 2020
6543

Asian LNG -62%

2

HH -22%

101-Jan

TTF -71%

1-Feb

1-Mar
HH

1-Apr
TTF

1-May

1-Jun

Asian spot LNG

Spot prices in Europe and Asia collapsed since the beginning of the year, while the US benchmark
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Demand downturn is expected to impact all regions and sectors
Breakdown of natural gas demand decline, 2019-20
By sector

By region
AfricaTransportEurope
Energy sector

Central and South America
Powergeneration

Asia PacificIndustry
Middle East

Eurasia

North America

Residential andcommercial

Mature markets in Europe, North America and Eurasia account for 75% of expected demand loss in 2020
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The Covid-19 crisis is likely to have long-lasting impact on gas growth
Regional breakdown of demand growth over the forecast
period, 2019-25
bcm

bcm

400
300

500

1.9%

450

1.8%

400

1.7%

350

1.6%

300

1.5%

200
1000- 100- 200

250

2019-202020-212021-25

Other emerging markets
China and Emerging Asia
Mature markets – Eurasia, Europe, North America, OECD Asia*

1.4%
Gas 2020 - preCovid-19

Gas 2020 revised

Net demand increase

CAGR*Australia, Japan, Korea, New Zealand

Even if most of the 2020 losses are estimated to be globally recovered in 2021, slower growth results in 75 bcm/y ofdemand lost by 2025 compared to our initial forecast (equivalent to incremental demand for 2019)
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CAGR

Incremental gas demand and CAGR in initialand revised forecasts, 2019-25

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LNG trade balance is unlikely to retighten before 2025

20075%

10070%

065%

Liquefaction capacity - nameplate
LNG exports

2025

80%

2024

300

2023

85%

2022

400

2021

90%

2020

500

2019

95%

2018

600

2017

100%

2016

700

2015

bcm

LNG trade and liquefaction utilisation rate, 2015-25

Liquefaction capacity - available
Utilisation rate - available (%)

LNG trade is expected to increase at a slower rate than liquefaction capacity additions, thus limiting therisk of a tight market over the coming years
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Key takeaways• 2020 is on its way to experiencing the largest recorded demand shock in the history ofglobal gas markets• Mature gas markets are expected to be the hardest hit by the combination of demand loss
from reduced economic activity and an exceptionally mild winter• Even if most of the 2020 loss is expected to be recovered in 2021, the Covid-19 crisis is
likely to have long-lasting impact on future growth• Slower demand growth increases the prospect of a loose market, casting a shadow on
future investment in production and trade infrastructures• The IEA is closely monitoring natural gas market developments and will provide quarterly
revisions on latest market analysis and short term projections

Contact: report@tky.ieej.or.jp
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