According to ‘First Estimates 2014’ released by Cedigaz, 2014 was a very mixed year for natural gas. For the second consecutive year, gas demand slowed down in 2014, with subdued activity in the global gas industry at all stages of the supply chain.
Natural gas consumption around the world (including storage variations) was sluggish last year and remained at a similar level to 2013. This can be reportedly explained by increased competition between energies, especially coal, the economic slowdown, geopolitical turmoil and the mild weather conditions which negatively impacted the expansion of gas demand. The global consumption trend showed regional disparities also. Natural gas demand in North America and the Middle East continued to register strong expansion, but the growth in Asia slowed, while consumption in the CIS and Europe declined dramatically. Plummeting consumption in Europe in particular weighed significantly on the overall trend.
Due to weak demand, world natural gas supply increased by only 1.1% to 3237 billion m3 last year, a quite similar trend to 2013, contrasting with the sustained average growth in the order of 2.8%/y recorded in the 2000s. In some emerging markets, production was affected by the decline of mature fields and a lack of upstream investment required to boost the exploration of new reserves.
World gas trade fell by 3.4% to 1005.2 billion m3 last year. The international pipeline trade contracted significantly by 4.8% to 691.5 billion m3, affected by the slump in Russian gas deliveries to Europe and Ukraine. The international LNG trade remained flat at 313.7 billion m3 for the third year in a row. World gas trade now accounted for 29% of marketed production, and LNG is 31% of total trade.
2014 saw a turnaround in the world LNG industry, after three years of market tightening. In Asia, new LNG supply combined with weak, predominantly weather related demand, resulted in a slump in LNG spot prices and the diversion of cargoes to Europe towards the end of the year. For the year as a whole, European net LNG imports pursued their decline but at a slower rate than in the two previous years, whereas LNG demand growth in Asia Pacific slowed down to 1.2%.
Specific constraints on both the supply and demand side have limited the growth of the gas market. 2014 emphasises in particular the deceleration of demand due to intense competition with cheap coal in both industrialised and emerging markets. In this context, global growth in gas demand in the short term is likely to remain low by comparison with the dynamic seen in the past 15 years.
Edited from press release by Claira Lloyd