LNG - a growth opportunity

Tuesday, 11 August 2020
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Following growth of more than 2% in 2019, global gas use is set to fall by around 4% in 2020, as the Covid-19 pandemic reduces energy consumption across global economies, according to the International Gas Union’s (IGU) latest report.

However, the resulting low gas prices, as well as clean air and climate policies, will promote further switching to gas from other more polluting energy sources, such as oil and coal. This trend was already underway before the pandemic, thanks to cost-competitive gas in key sectors including power, industry and transport, and major regions including Europe, North America and Asia.


‘Global Gas Report 2020’, published by the IGU, research company BloombergNEF (BNEF) and Snam, the Italian-based gas infrastructure company, said that medium-term growth will come from increasing cost-competitiveness and increased global access to gas.

A growth opportunity exists in LNG. LNG imports reached 482 bill cu m in 2019, up 13% from 2018, and while this figure is expected to fall by around 4.2% this year, it could rebound quickly to previous levels as soon as 2021, depending on the persistence and longevity of the pandemic.


Ample natural gas resources exist to support demand growth, but greater gas infrastructure development is needed to support growth in the medium term. India is planning to almost double the length of its gas transmission grid, while China will grow its gas network about 60% by 2025, the report said.


Ashish Sethia, BNEF’s global head of commodities, commented: “The pandemic has created disruption in the global energy sector, but low gas prices will ultimately stimulate demand growth as the economy recovers. We have already seen unprecedented coal-to-gas switching in Europe, and clean air policies in major growth markets, such as India and China, will drive more gas adoption in the next few years.”


Joe Kang, IGU President, said: “This pandemic crisis comes at great cost to the industry, the economy and society at large. It also reminded the world about the value of clean air and healthy environment for wellbeing, providing a unique opportunity to rebuild better.

“Gas is an abundant, clean, accessible and flexible substitute to more polluting energy sources, and supporting greater fuel switching from coal and oil to gas in the immediate term, while ensuring infrastructure is ready to accommodate progressively greater scale of clean gas technologies in the coming decade, is the way to secure a sustainable and prosperous future,” he said.


In the longer term, there are major opportunities to scale up the use of low-carbon gas technologies, but these depend on substantial policy action and infrastructure investment in the coming years.


The report also reviews the long-term outlook for natural gas under different existing scenarios, including those from the International Energy Agency (IEA), BNEF and IGU analysis. The IEA’s Stated Policies Scenario, from its ‘2019 World Energy Outlook’, forecasts gas use growing 1.4% per year to 2040, while BNEF’s economics-led ‘New Energy Outlook 2019’ predicted 22% growth in power sector gas demand to 2050.

In contrast, the IEA’s Sustainable Development Scenario sees natural gas use declining from the end of the 2020s onward, as the global energy demand flattens and the world embraces stronger climate action.

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