LONDON (Reuters) - The coronavirus crisis and a very mild winter in the northern hemisphere have put global natural gas demand on course for the biggest annual fall on record, the International Energy Agency said in its annual outlook on Wednesday.
Global gas demand is expected to fall by 4%, or 150 billion cubic metres (bcm), to 3,850 bcm this year – twice the size of the drop following the 2008 global financial crisis.
Major global gas markets have experienced price falls to record lows as lockdowns and reduced industrial output due to the COVID-19 pandemic have stunted demand.
The oil and gas industry is cutting spending and postponing investment decisions. Although a rebound in demand is expected in 2021, the IEA does not expect a quick return to pre-crisis levels.
For the full year, more mature markets across Europe, North America and Asia are forecast to see the biggest drops in demand, accounting for 75% of the total fall in 2020.
“Global gas demand is expected to gradually recover in the next two years, but this does not mean it will quickly go back to business as usual,” said Fatih Birol, IEA executive director.
“The COVID-19 crisis will have a lasting impact on future market developments, dampening growth rates and increasing uncertainties,” he added.
The IEA forecasts 75 bcm of lost annual demand by 2025 - the same amount as the increase in global demand in 2019.
After 2021, most of the increase in demand will be in Asia, led by China and India where there is strong policy support.
Liquefied natural gas is expected to remain the main driver behind global gas trade growth, but it faces the risk of prolonged overcapacity as the build-up in new export capacity
from past investment decisions outpaces slower than expected demand growth, the report said.
Reporting by Nina Chestney; editing by David Evans