Saudi FM calls Indian, Pakistani counterparts to discuss developments    Al Hilal thrash Gwangju to reach AFC Champions League Elite semi-finals    Saudi Arabia cracks down on fraudulent Hajj campaigns, urges pilgrims to use official channels    Nammos Amala Resort to open soon with Saudi-Greek designs    Saudi Arabia completes 674 Vision 2030 initiatives, achieves 93% of KPIs as ninth-year milestone marked    Literature Commission inaugurates Saudi Pavilion at Muscat Book Fair    Saudi Minister of Culture holds talks with his Costa Rican counterpart in Jeddah    Alkhorayef praises advancements in Al-Kharj food industries sector    MHRSD: 80% of recruitment offices are non-compliant with regulations    At least 50 Palestinians killed in Israeli strikes across Gaza    Teenage girl killed in French school stabbing attack    Trump claims meeting with China after Beijing denies any trade negotiations    GACA chief chairs 16th meeting of the Steering Committee on aviation's strategy    Saudi Theater Commission launches its Work and Learn Project in UK    The season has begun — and one comment shook us all    Jennifer Lopez dazzles in Jeddah with a Formula 1 performance    Saudi Arabia open to expanded 64-team World Cup in 2034, says sports minister    Average life expectancy in Saudi Arabia rises to78.8 years    Film Commission launches 'Cinema' initiative to enhance content    Famed Philippine film star Nora Aunor dies at 71    Pakistani star's Bollywood return excites fans and riles far right    Veteran Bollywood actor Manoj Kumar dies at 87    Bollywood actress vindicated over boyfriend's death after media hounding    Grand Mufti rules against posting prayers and preaching in mosques on social media    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Global demand for natural gas to drop 2% in 2020 as lockdowns take toll
Published in The Saudi Gazette on 18 - 05 - 2020

Commercial and industrial demand for natural gas is declining as most countries around the world impose lockdowns to limit the spread of the COVID-19 pandemic. Rystad Energy estimates global natural gas demand to fall by almost 2% this year as a result of the lower activity.
In absolute terms, we expect global gas demand to total close to 3,878 billion cubic meters (Bcm) in 2020, down from 3,951 Bcm last year. In our pre-Covid-19 estimates, this year's natural gas demand was expected to grow to 4,038 Bcm.
Like oil demand, gas demand is also expected to suffer as a result of the slowdown. However, low prices are shielding gas demand to some extent as the fuel remains more competitive than other sources of energy, especially in the power sector where gas use remains relatively stable in most countries.
"2020 will be the first year since 2009 where there will be no growth in consumption. This will be a hard blow for an industry accustomed to yearly growth rates of more than 3%," said Rystad Energy's Head of Gas and Power Markets Carlos Torres-Diaz.
The impact on gas demand has varied substantially from country to country depending on the severity of lockdown measures and factors such as the power mix and industrial activity. Countries with capacity to switch from coal to gas will see less effect from the demand drop.
Italy is one of the countries that have been the most affected by COVID-19, and as a result the government decided to impose a strict lockdown starting in the beginning of March. The average loss in gas demand from the power and industrial sectors has been a staggering 23% over the duration of the lockdown.
However, Italy has little coal-power generation capacity, meaning that any reduction in power demand will represent a similar drop in gas-for-power demand as a it is difficult to achieve a reduction in generation from renewable sources.
Other European countries have seen similar effects, with the International Energy Agency estimating a total loss in weather-adjusted gas demand of 25% in France and 19% in the UK.
On the other hand, demand in the US continues to thrive, mostly as a result of increasing demand from the power sector, which has compensated for the drop in other sectors. Gas demand from the power sector has averaged 25 billion cubic feet per day (708 million cubic meters per day) over the last two weeks, which is practically in line with last year's level.
But there have been periods during the current lockdown where demand has been more than 15% above last year's level. The main reason for this is that gas prices remain very low, and while coal prices have also dropped, gas is still more competitive in power generation. The drop in US power demand has therefore pushed coal out of the generation stack rather than gas.
There are many other countries that also have a large coal-to-gas switching capacity, such as Australia, Germany and South Korea, which could see similar demand responses to the one seen in the US.
A lot of uncertainty remains about the actual impact on gas demand. The possibility of new lockdowns, the slowdown in economic growth and the effect of stimulus packages on reactivating commercial and industrial activity could all tip the gas-demand scale.
This uncertainty represents a downside risk for gas demand for the rest of the year. However, Rystad Energy has forecasted natural gas production to be around 4,000 Bcm in 2020 based on the lower investment activity expected across the E&P industry during this year.
Given that global gas storage capacity is very limited and that a lot of the gas production is driven by liquids, producers will push these volumes into the market. This could trigger a demand response to absorb the additional volumes, but this will be very dependent on gas prices remaining competitive to coal.
Our forecast is for European gas prices (TTF) to average $3.3 per MMBtu and Asian spot prices to average $3.8 per MMBtu this year, which is below the coal-to-gas switching range in most countries.
Therefore, if coal producers manage to reduce prices further and the steep contango in the gas forward curves remains, then there is a risk of seeing a slowdown in gas demand towards the end of the year. — Rystad Energy


Clic here to read the story from its source.