Gas demand and supply 2021 suddenly became an issue that became a hot topic in Europe and Asia. The problem is that several European and Asian countries are facing an energy crisis. It causes many citizens to be unable to pay their electricity bills because prices soar very high in years.
The affected European countries, Germany, UK and may be able to expand if they do not find a solution to address the increasing demand for natural gas but the declining supply chain.
Meanwhile, in Asia, countries such as India and China are also facing an energy crisis, and it is reported that China has been forced to use Australian coal, even though the two countries are at odds due to Australia accusing China of being behind the Covid-19 pandemic.
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- 1 Gas demand coronavirus
- 2 Gas demand Europe 2021
- 3 Gas demand in Asia
- 4 Gas demand the United States
- 5 Gas demand worldwide
- 6 Natural gas demand projections
- 7 Conclusion
The coronavirus that hit the world globally became a unique event in the history of mankind, in the industrial sector, this condition decreasing demand when many countries had to lock down in order to limit movement to suppress the transmission of the coronavirus.
However, it turns out that the demand for natural gas in 2021 will increase which will cause a chain effect that includes an increase in electricity prices by more than 100% in several European countries. Not only that, due to the dwindling supply of natural gas, many industries are looking for substitute energy sources, resulting in an increase in coal prices.
Gas demand Europe 2021
In 2020, European gas demand declined by 1.9% due to the worst economic disruption due to the pandemic, and the effects of winter in Europe.
The International Energy Agency (IEA) states gas demand is likely to recover by 3.6 % this year. If left unchecked, in 2024 global gas consumption could grow 7% higher than pre-pandemic levels.
To cope with the supply of natural gas, Europe relies on imported gas. One of the reasons is the decline in European gas production. Some North Sea gas reserves are starting to dry up, as are a number of gas fields in the Netherlands, such as Groningen which will close in mid-2022.
According to European emissions, natural gas storage levels in March 2021 fell to 30%. This is lower than March 2020 which was at the level of 24%.
Gas demand skyrocket as recovery economy
The European Commission further stated that gas consumption rose in the first quarter by 10 billion cubic meters (bcm) – or 7.6%. The generation of electrical energy also increased by 3.4% around 4.9 TWh. At the same time imports fell by 78.5 bcm lower than the previous year, with a decline of 3%.
The wholesale price of European natural gas is heavily influenced by the Asian market because Europe relies heavily on imports. Russia and Norway are the leading suppliers to Europe. Russia’s export restrictions are affecting supplies to Europe.
But it is reported that Russia will fulfill its long-term contract to fulfill supply for Europe although it is currently down compared to 2019.
Meanwhile, European gas prices have skyrocketed by 600% in 2021. In early October 2021, there was a 37% jump in UK wholesale gas prices in just 24 hours. The soaring prices prompted a group of businesses representing the steel, chemical, and fertilizer businesses to ask the British government for assistance against the spiraling costs.
Gas demand forecast Europe
Referring to information from the IEA, that during the 2020-2021 heating season Europe’s gas consumption rose by more than 5% y-o-y. This consumption is driven by cooler winter temperatures, increasing gas consumption for households. And also due to higher gas demand in the power sector and economic recovery in the industry.
The IEA estimates that European gas demand will increase by 3% in 2021, as a result of improved economic growth in Q1. The sharp rise in carbon prices will support additional gas burning in the electricity sector throughout the summer. And in the industrial sector, the IEA estimates that gas demand will recover due to improving economic conditions.
Gas demand Europe 2030
Gas demand in 2030, referring to the long-term outlook by Eurogas, in which Eurogas is the task force to conduct a study to determine the effect of European gas demand. In 2009 the task force had discussed this matter. Their assumption is that gas has a relationship with the price of oil, coal, and CO2. Eurogas projects oil, coal, and CO2 prices in 2030. For oil in the range of 80-100 ($/bbl), coal 70-90 ((eur/t), can CO2 40-50 (eur/t).
Furthermore, Eurogas expects gas demand in 2030 to be in the range of 500 and 535 mtoe in 2030, increased between 14% and 23%. Europe’s primary energy demand is also expected to increase from 24% in 2007 to 27%-29% in 2030. In the midst of the green properties campaign, natural gas will still be an important fuel for decades to come.
Gas demand in Asia
Winter in Northeast Asia is the first cause of soaring LNG demand. Meanwhile, the availability of LNG supplies faces logistical constraints on LNG shipments.
As a result, local fuel shortages triggered an unprecedented spike in spot LNG prices. These conditions affect the price of LNG in the European market, while demand is soaring, supply is constrained. Some of the affected Asian countries such as China, Japan, Korea, India.
Gas demand in Asia by IEA.
From the graph presented by the IEA, Asian gas demand increased on average in 2021 compared to 2020. India is the country that needs the largest supply, then China, Korea, and a combination of several emerging countries in Asia.
Gas demand China
Gas demand in China increased to 23% Year of Year in January. The cold winter season requires more gas consumption for heating. And also the economic growth after China went through the pandemic period has led to increased demand.
Due to soaring demand, China is turning over most of the supply to LNG to meet record levels of demand. That caused imports to increase by 38%. However, there is not enough supply chain in all industrial sectors. Where non-priority sectors face restrictions sporadically. LNG prices in several cities in China reached USD 28/MBtu.
Korea gas demand
In Korea, the impact of soaring gas prices and tightening LNG fundamentals has had little effect. electricity prices were relatively stable even though LNG prices rose sharply in January. Korea’s LNG imports fell 1% y-o-y in January 2021, while nuclear plants rose 18% y-o-y in January.
Gas demand Malaysia
In 2020 became the shortest curve on gas consumption in Malaysia, with a demand of 3,681 Cub ft/Day bn in Dec 2020, a sharp decline compared to 2019 which was at the level of 4,325 Cub ft/Day.
The gas demand curve in Malaysia released by CEIC, shows the decline in demand since 2019, in line with the catastrophic coronavirus pandemic that led to social distancing and lockdown.
Meanwhile, Petronas which is the largest Malaysian company engaged in the oil and gas sector through Chief Executive Officer Tengku Muhammad Taufik stated that the recovery was still facing uncertainty.
But Petronas reported a profit of around $2.29 billion from April to June. The amount is much smaller than the loss of 21 billion ringgit in the same quarter of 2020.
Gas demand Singapore
Singapore is one of the countries in Asia that is also facing an energy crisis. There was a spike in spot electricity prices, according to the Energy Market Authority (EMA) the result of a confluence of factors including restrictions on gas from Indonesia’s West Natuna and gas supplied from South Sumatra.
In a piece of information provided by SKK Migas, the reduced gas supply to Singapore occurred due to an unplanned shutdown at the Anoa Field on July 21, 2021.
Then, on July 23, 2021, supply from Gajah Baru Field also briefly stopped due to repairs that had been planned in advance and had been communicated to the buyer.
The value of gas imports in Singapore is higher than the value of its exports. And because they need gas depends on Indonesia, which is a neighboring country. As a result, when supply from Indonesia experiences regulatory disruptions, the impact is inadequate gas supply, resulting in a spike in electricity prices.
Gas demand Singapore arise in 2020 by CEIC data
Gas demand in India
India is a country in Asia that is the second-largest drive for consumption gas demand in Asia. According to the IEA, the annual average demand growth is 9%.
In May, gas consumption reached 5,247 mscm, 4.3% higher than the previous year. The volume of gas imports in India also increased by 9.2% when compared to the previous year 2020. Cumulatively, India’s total LNG imports reached 5,242 mscm.
The allocation of natural gas demand in India in statistics by the IEA to electricity consumption (23%), CGD entities (16%), refineries (12%), and petrochemicals (8%). 28% of the livestock industry.
But in 2021 India is also facing an energy crisis, as a result of soaring gas prices, and a lack of coal supply.
Gas demand in India arise by CEIC data
Gas demand in Vietnam
Vietnam’s gas consumption, according to a report from Statista, the average annual demand for gas consumption reaches 8.7 billion cubic meters. The highest demand curve occurred in 2015 with a peak of 10.3 billion cubic meters.
Gas demand Vietnam by CEIC data
Gas demand the United States
The United States gas demand has always been increasing since 2009. Citing to CEIC data, demand tends to increase until 2019 and experienced a slight decline in 2020 at 80,280 Cub ft/Day bn.
One of the reasons for the declining demand is the lockdown which causes consumption for the industry to decrease. In 2021 the United States will also be facing the threat of an energy crisis like in Europe and Asia.
To anticipate this, several electricity producers in America have started using coal as a result of tight supply and high gas prices. Chief Executive Officer of Xcoal Energy & Resources LLC, Ernie Thrasher state if several companies have switched to using coal to prevent power outages due to high gas prices and tight supply.
Gas demand United States by CEIC data
Gas demand worldwide
The International Energy Agency expects global gas demand in 2021 to rise 3.2%. Although Amid the uncertainty of the coronavirus pandemic that still looms over human civilization. By 2024, it is hoped that the world will get off track of achieving net-zero emissions which is an agreement target in 2050.
The agreement is held in a Paris agreement consisting of 190 countries have signed. The agreement is an effort designed to reduce global warming to 1.5 degrees Celsius. And to achieve this goal, of course, this requires a major reduction to abandon fossil fuels such as coal and gas.
Net-zero emissions 2050 target
The IEA predicts that if the government does not implement further policies towards net zero emissions by 2050. Gas demand will recover strongly this year.
The IEA predicts that global gas demand in 2021 is expected to increase by 3.6%. This is because the economic recovery period has recovered where there has been the relaxation of lockdown in several countries.
Furthermore, the IEA predicts demand growth in 2022-2024 at an average of 1.7% per year. The number of requests is still too high to follow the IEA roadmap towards meeting global net-zero emissions by 2050.
Natural gas demand projections
Citing to Knoema, LNG price trajectory in the Henry Hub projection spot market, Louisiana is to increase by an average of $3.07 per million British thermal units (MMBtu) higher than 2020. Meanwhile, in 2022, the average price is expected to fall to $2.93/MMBtu.
Meanwhile, forecasting from the World Bank projection the average price of natural gas at $2.80/MMBtu, in the US, in 2021. While Japan projection to be higher at $8.00/MMBtu, and Europe at $5.59/MMBtu.
On other hand, according to projections from the IMF in 2021. The price prediction is worth $3.84 billion dollars in the United States. $11.37 billion dollars in Europe. And $13.68 billion dollars in Japan.
The agreement on net-zero percent emissions by 2050 is a global challenge. It may affect many industrial and energy sectors. Preparations to leave a carbon footprint by creating environmentally-friendly machines must be met.
If only policy rules are pursued towards the roadmap of the agreement being tightened. Without another comprehensive solution, the threat of crisis could hit the world again. The current condition may be that only some countries have been affected by the energy crisis as a result of tight supply. Allows this condition to spread to other countries.
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