Gas Market Report, Q3-2021

Gas Market Report Q3-2021: Analysis and Forecast to 2024

Overview and Key Findings

• Global Natural Gas Demand:

  • 2020: Dropped by 1.9%, or 75 bcm, due to an exceptionally mild winter and the impact of the COVID-19 pandemic.
  • 2021: Expected to rebound by 3.6%. Without major policy changes, demand is projected to continue growing to nearly 4,300 bcm by 2024, a 7% rise from pre-COVID levels.

• Demand Growth:

  • 2022-2024: Slowed to an average 1.7% annual rate, driven by economic activity and fuel switching from coal and oil.
  • Asia Pacific Region: Expected to contribute almost half of the increase in gas demand to 2024, primarily driven by China and India, and emerging markets in South and Southeast Asia.
  • Industrial Sector: Accounts for about 40% of the total increase in demand between 2020 and 2024, including the use of gas for industrial processes and as a feedstock for chemicals and fertilizers.

• Supply:

  • 2024: Expected to be 6% higher than pre-COVID levels, primarily from large conventional assets already under development, mainly in Russia and the Middle East.
  • LNG Markets:
    • 2024: Expected to see 17% growth compared to pre-COVID levels, driven by continued demand growth in Asia.
    • Liquefaction Utilisation Rate: Expected to return to pre-2020 levels by 2024, with the wave of final investment decisions taken before 2020 proving sufficient to meet additional demand.
    • Flexibility: Contributed by the growth of long-term contracts without destination clauses, robust growth of the LNG carrier fleet, and increasing underground storage capacity.

• Policy and Environmental Considerations:

  • Net-Zero Emissions Pathway: Stronger policies are needed to support further fuel substitution and efficiency gains, especially in more mature markets.
  • Methane Emissions: Reducing methane emissions is an efficient way to narrow the industry's footprint, with up to 40% of current methane emissions potentially avoidable at no net cost.
  • Low-Carbon Sources: Transition to cleaner gases like biomethane, hydrogen, and synthetic methane requires regulatory and infrastructure adjustments for cost-competitive integration.

Summary

This report highlights the rebound in global natural gas demand post-COVID, with a forecasted increase to nearly 4,300 bcm by 2024. Demand growth is driven by economic recovery and fuel switching, particularly in the Asia Pacific region. Supply is expected to rise, mainly from existing projects, though policy measures are needed to align with net-zero emissions goals. The LNG market is expected to grow steadily, with increased flexibility from long-term contracts and expanded carrier fleets. Reducing methane emissions and transitioning to low-carbon sources of gas are critical for achieving environmental targets.