Cedigaz Sees Low Demand for Gas in 2015
The world’s recorded gas demand grew by just 1.6% year on year, to 3.472 trillion m³ in 2015, according to Cedigaz’s first estimates published April 29. In a gloomy outlook for gas, the French consultancy cited weakening economies, efficiency improvements, the rise of renewables, and more cheap coal as the headwinds it faces.
It said the regions that saw the biggest rise were North America, Europe, the United Arab Emirates (UAE) and Iran.
European demand fell in 2014 by 11% but bounced back last year by 4.5% with a cold start to the year. Elsewhere, record low prices and environmental regulations led to a switch from coal in the US. Iran and the UAE also used more than the average percentage increase would suggest.
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Cedigaz said that the inability of natural gas demand to keep pace with an accelerated supply growth coupled with weak oil prices had overturned the market, leading to a price weakness which is expected to continue in the short and medium-term, amid a sluggish economic environment. Overall, except in the US and a limited number of countries in the Middle East and southeast Asia, the future of gas faces many challenges
The year 2015 saw considerable changes in macroeconomic and price factors. International crude oil prices fluctuated to new lows, with Brent averaging $52/barrel, down by 47% from the previous year. This affected long-term gas contracts favourably from the buyers’ perspective but sluggish economic growth and the return of some nuclear capacity limited gas demand.
Japan and South Korea saw steep declines while in China growth was decelerating, and LNG imports bore the brunt of that, it said, mentioning a reduction there of energy intensity. And a shrinking Russian economy also needed less gas, although its pipeline exports rose, owing to the cap on Groningen gas output.
There was more LNG production in the Asia-Pacific region which benefited Europe. In this context, LNG trade returned to growth after three years of stagnation, it said. Overall, regional gas prices tended to converge except for North American which remained significantly lower than in the rest of the world.
William Powell