The world’s consumption of natural gas is set to decline by four percent this year, but global demand will return to growth after the pandemic, thanks to low natural gas prices and stricter environmental policies, a new report has shown.
The Global Gas Report 2020 – published by the International Gas Union (IGU), research company BloombergNEF (BNEF), and Italian gas infrastructure firm, Snam, said the trend of increased natural gas demand due to environmental concerns, which was already underway before the pandemic, will continue after COVID-19 is under control.
Earlier, an analysis of S&P Global Platts Analytics data showed that exports of LNG from West Africa’s four producers have shown some resilience, despite economic turmoil triggered by the coronavirus pandemic.
Total LNG exports from the four exporting countries in the region – Nigeria, Angola, Equatorial Guinea and Cameroon, so far this year are broadly in line with volumes supplied in the same time frame last year, the data show.
That is despite sharp falls in LNG utilization rates in other parts of the world, particularly in the US, while spot-exposed Egypt has halted LNG exports altogether.
Nigeria is exposed to the spot market with around 50% of its LNG exports last year sold on a spot or short-term basis, according to industry group GIIGNL.
But Nigeria’s LNG exports in 2020, have stayed strong despite weaker demand and low prices, with some 11 billion cubic meters (Bcm) exported in the first five months of the year.
Although some loaded cargoes had taken longer to reach their destinations, while others have been idling at sea in recent weeks, but exports continued out of the country’s only LNG plant, the 22 million mt/year Nigeria LNG facility.
During a webinar on the country’s petroleum sector in June, the National Nigerian Petroleum Corporation (NNPC) Group Managing Director, Mele Kyari, said a shortage of gas had made it difficult for the country to make use of its installed capacity.
As of January 2020, Nigeria’s gas reserves stood at 203.16 trillion ft3, representing a marginal increase of 1.16 trillion ft3 from the 202 trillion ft3 recorded in 2019.
The International Energy Agency (IEA), also sees global natural gas demand dropping by four percent in 2020, which would be the largest demand shock for gas markets in recorded history, with consumption expected to drop by twice the amount it did after the 2008 financial crisis.
The cost-competitiveness of natural gas and the increased access to gas in developing countries are set to be the key drivers of higher gas demand in the medium term, especially for liquefied natural gas (LNG), the Global Gas Report 2020 found.
Global LNG imports could return to their 2019 level quickly, as soon as in 2021, depending on the persistence and longevity of the pandemic.
“The pandemic has created disruption in the global energy sector, but low gas prices will ultimately stimulate demand growth as the economy recovers. We have already seen unprecedented coal-to-gas switching in Europe, and clean air policies in major growth markets such as India and China will drive more gas adoption in the next few years,” said Ashish Sethia, global head of commodities at BNEF.
For the longer term, however, low-carbon gas technologies would be needed, but they will depend on significant investments and policy actions, the report said.
“It is increasingly clear that the goals of the Paris Agreement cannot be met without a substantial scale-up of clean gas technologies – such as hydrogen,” Jon Moore, CEO of BNEF, said.
“While the economics are challenging today, a joined-up policy approach could unleash the investment needed to bring costs down, develop scalable business models and drive adoption across the hard-to-abate sectors.”
FG re-affirms commitment to deepening LPG penetration, consumption
The Minister of State for Petroleum Resources, Timipre Sylva, has reiterated the Federal Government’s commitment to deepen Liquefied Petroleum Gas (LPG) penetration and consumption in Nigeria.
The Minister said Nigeria’s LPG consumption remains one of the lowest in West Africa, noting that plans are ongoing to boost its consumption to five million tonnes.
He stated this at the inauguration of Rain Oil’s 8000 metric tonnes (MT) LPG facility in Ijegun Egba area of Lagos.
He said energy is at the core of the global economy, adding that it is encouraging to see Nigerians at the commanding height in the global energy space.
He noted that the inauguration comes when the country declared 2020 as a year of gas, to make it a preferred source of energy.
“Gas is the new direction and I am happy that Rain Oil is investing in this direction. We will do everything to support you and we want you to see yourselves as partners with the government to create value addition for Nigerians,” he said.
Sylva added: “We are trying to see how we can introduce gas as an alternative for fuel and we are also trying to deepen the penetration of LPG use in the country. This is actually the best time to have this investment. I want to also commend Rain Oil for the foresight in making this investment at this time, because the future is very bright.”
The Group Managing Director, NNPC, Mele Kari, said it is the ambition of the Buhari-led government to deepen the utilisation of gas in all its forms.
“All of these cannot be done without the necessary architecture and infrastructure to support it. We are trying all we can at NNPC to put all the necessary physical infrastructure from the upstream to midstream, into homes and businesses. We cannot achieve this alone and that is why we are partnering stakeholders like Rain Oil to deepen the use of LPG in the market,” he said.
“We are happy that this is coming and there are other couple of stakeholders doing the same thing; and overall, within a short period of time, we will see LPG utilisation deepened in this country, which would reduce the cost of energy for the ordinary man and businesses in the country,” he added.
The Group Managing Director, Rain Oil Limited, Dr. Gabriel Ogbechie, said the inauguration of its 8,000MT LPG facility marks its debut into the sector.
He said the firm is one of the very few downstream players that own tank farms in three key locations in Nigeria: Lagos, Oghara and Calabar.
“Rain Oil Limited is a leading integrated oil and gas company; we operate across the entire value chain of the downstream sector of the Nigerian oil and gas industry.”
He said for over 23 years, it has perfectly aligned its company’s vision and mission to continually proffer solutions to bridge gaps in the energy sector.
“We currently account for a significant percentage of petroleum product distribution in the country. In addition to our 8,000 MT LPG storage facility, we have a fleet 0f 40 LPG trucks to strategically support the distribution of products to our customers,” he noted.
