With analysis from Kristy Kramer, Director Americas Gas Research, Stephen O'Rourke, Research Director Global Gas Supply, Murray Douglas, Research Director, Europe Gas, Dulles Wang, Research Director, Americas Gas Research, Miaoru Huang, Senior Manager, Asia Pacific Gas and LNG
The coronavirus global pandemic and subsequent collapse in oil price has had a profound impact on global gas markets, changing supply and demand fundamentals.
What's the outlook for global gas markets in 2020?
The impact of coronavirus on demand has been immediate.
We expect global gas demand to contract by about 2% from 2019 levels, with 2020 demand about 70 bcm lower than 2019. This decrease exacerbates pre-coronavirus expectations for an oversupplied 2020.
How long it takes to recover will depend on the macroeconomic environment. Lost demand in the industrial and electricity sectors will bounce back, but not to pre-coronavirus levels. Slowing of high-growth economies will hit the gas market hardest.
Global supply will respond more slowly as the larger impacts of deferred or cancelled investment have longer lead times to production. Upstream backfill for projects in mature basins will be delayed, reducing LNG output in the coming years. Pre-FID project deferrals and cancelations will become a feature over the next couple of years.
And as a result, major players will adjust their strategies to maximise revenue for short-term fiscal and longer-term strategic objectives.
How governments and policymakers react – either to defer energy transition targets due to the economic environment or accelerate them building on clean air improvements and low gas prices – will differ across the globe. We'll be watching the signals closely in the next few months.
Get your preview copy of the Global Gas Markets H1 2020 report to learn:
- How the gas market is reacting to coronavirus and volatile oil prices
- What recovery signals to look for
- Key uncertainties that we are debating in formulating the H1 2020 view
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