Home / Oil & Energy / General Energy News / Asian LNG demand spike not indicator of ‘major’ global demand rebound in 2021: IEA

Asian LNG demand spike not indicator of ‘major’ global demand rebound in 2021: IEA

The spike in Asian LNG demand in January on the back of freezing regional temperatures is not an indicator a “major” global demand rebound for the remainder of 2021, a senior official from the International Energy Agency said Jan. 28.

IEA senior gas analyst Jean-Baptiste Dubreuil said the agency expects a small recovery in global gas demand this year after a decline in 2020 due in part to the coronavirus pandemic.

Asian LNG demand rose sharply in early January as temperatures plunged, prompting a rally in the JKM spot Asian LNG price to an all-time high of $32.50/MMBtu.

Dubreuil, speaking on a webinar hosted together with the Dutch Clingendael International Energy Programme and Italy’s Istituto Affari Internazionali, said the demand and price spikes were a “short-term phenomenon.”

“This short-term event does not herald a major demand rebound for 2021, both in terms of global gas and of LNG demand,” he said.

In its first ever quarterly gas report published Jan. 26, the IEA said global gas demand was expected to increase by 2.8% — or around 110 Bcm — this year, just above the extent of the decline witnessed last year and signaling a return to 2019 consumption levels.

According to the IEA, gas demand in 2020 fell by 2.5%, or by an estimated 100 Bcm, to around 3.91 Tcm — the largest ever recorded drop in gas consumption.

Demand this year is seen at 4.021 Tcm.

Dubreuil warned, however, that the rate of demand growth remained uncertain due to ongoing concerns over the coronavirus pandemic.

“Drivers for growth remain fragile,” he said. “Any prospect of a prolonged health crisis and delayed recovery will negatively impact this rebound to 2019 gas demand [levels].”

Mature gas markets bore the brunt of the demand decline in 2020 and Dubreuil cautioned about growth in 2021.

“Mature markets — which took around 80% of the impact last year of the demand decline — are likely to see a more gradual recovery and some of them may remain below their 2019 demand levels by the end of this year,” he said.

Industry demand
Dubreuil said industry would be the main driver of gas demand growth — not only for 2021, but also for the near-term future, especially for Asia’s export-driven industries.

But, he said, the outlook remains “strongly dependent” on the rate of economic recovery and the prospect of any potential slowing down or delayed recovery in 2021.

He added that the rebound so far in 2021 in residential and commercial demand would likely be a “one-off.”

“Beyond 2021 and this short-term recovery, we do not expect that much further growth globally for residential and commercial use, apart from small pockets especially in China and in south and southeast Asia,” he said.

In the longer term, Dubreuil said the next five years would prove a “very challenging” environment for LNG buyers and sellers in terms of renewal of about one third of existing contracted volumes and rising liquefaction capacity.

He said new buyers would be attracted to the LNG market as a result.
Source: Platts

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping