UK major BP has issued the 70th edition of its Statistical Review of World Energy, highlighting global energy trends including LNG, the pipeline natural gas sector, oil and renewables and their recovery path from the Covid-19 pandemic and the oil price crash.
Inter-regional gas trade dropped by 5.3 percent, completely accounted for by a 54 Bcm, or 10.9 percent, fall in pipeline trade.
“LNG supply grew by 4 Bcm, or 0.6 percent, well below the 10-year average rate of 6.8 percent,” said the BP report.
US LNG supply expanded by 14 Bcm, or 29 percent, though this was partially offset by declines in most other regions, notably Europe and Africa.
“European gas imports fell by over 8.5 percent last year. The gas-on-gas competition in Europe takes the form of pipeline imports, predominantly from Russia, competing against LNG imports largely from the US as the marginal source of LNG,” said the 72-page Review from BP.
“As LNG imports have increased in recent years it has raised the question of the extent to which Russia and other pipeline gas exporters will compete against LNG to maintain their market share or instead forgo some of that share to avoid driving prices too low,” the UK major's report explained.
On the pricing front, BP noted that natural gas prices declined to multi-year lows with the US Henry Hub averaging $1.99 per million British thermal units, the lowest since 1995.
Asian LNG prices also tumbled in the form of the Japan Korea Marker, which registered its lowest annual average of $4.39 per MMBtu since it was launched in 2009 by US pricing agency Platts.
BP’s report showed that natural gas consumption fell by 81 Bcm, or 2.3 percent.
“Nevertheless, the share of gas in primary energy continued to rise, reaching a record high of 24.7 percent,” said BP.
Declines in gas demand were led by Russia, down 33 Bcm, and US demand fell 17 bcm.
The largest increases in natural gas demand were logged by China at 22 Bcm and by Iran with 10 Bcm of additional needs.
Oil market
In the oil market, linked to long-term LNG cargo prices and the economics of development projects, the North Sea Brent crude price averaged $41.84 per barrel in 2020, the lowest since 2004.
Refinery utilization also fell by a record 8.0 percentage points to 74.1 percent, the lowest level since 1985.
BP reported that oil consumption fell by a record 9.1 million barrels per day, or 9.3 percent, to its lowest level since 2011.
Oil demand fell most in the US, down 2.3 million b/d, the European Union, down by 1.5 million b/d and India where the market declined by 480,000 b/d.
China was virtually the only country where consumption increased with a jump of 220,000 b/d.
Global oil production shrank by 6.6 million b/d, with the Organization of Petroleum Exporting Countries accounting for two-thirds of the decline. The largest OPEC declines came from Libya, down 920,000 b/d and Saudi Arabia, down 790,000 b/d.
The biggest non-OPEC falls were in Russia where output declined by 1.0 million b/d and the US, down 600,000 b/d.
Overall global energy demand is estimated to have fallen by 4.5 percent in 2020.
The drop in oil consumption accounted for around three-quarters of the total decline in energy demand.
Natural gas showed greater resilience, helped primarily by continuing strong growth in China.
Despite the market disorders of 2020, renewable energy, led by wind and solar energy, continued to grow, increasing last year by 238 gigawatts.
