Why natural gas demand fell only slightly despite pandemic


Why natural gas demand fell only slightly despite pandemic

Photo of Paul Takahashi
Jan. 11, 2021 Updated: Jan. 11, 2021 12:18 p.m.

Global demand for natural gas fell just 2.5 percent in 2020, despite the economic lockdowns caused by the coronavirus pandemic, according to a new report.

Natural gas demand was buoyed by low prices, which made it a sought-after commodity in the power generation sector, according to Rystad, a Norwegian energy research firm. U.S. benchmark Henry Hub natural gas prices averaged $2.03 per million British thermal units in 2020, down from $2.57 per million Btu in 2019.

By contrast, global crude demand plunged by as much as 16.4 percent as travel plummeted during the the global pandemic last year, according to the International Energy Agency. U.S. oil prices fell to negative territory for the first time in history before recovering to above $50 a barrel this month.

The low crude prices caused global natural gas production to decline by 3.6 percent in 2020. Rystad estimates that energy companies produced 137.7 trillion cubic feet of natural gas in 2020. North American natural gas production fell the most, dropping by 1.7 trillion cubic feet to 38.8 trillion cubic meters, according to Rystad.

Despite the lockdowns, global liquified natural gas imports in 2020 grew 3 percent to 363 million tonnes, driven in large part by Asia’s recovery from the pandemic. Other countries also took advantage of low prices to substitute natural gas for coal in their power plants.

By Paul Takahashi
Paul Takahashi