The global LNG market slowly recovers in early 2021
According to the International Energy Agency (IEA), the global LNG market recovered modestly at the end of 2020, after a downward trend. The LNG market is expected to grow in 2021, albeit at a slow pace.
According to the International Energy Agency (IEA), global gas markets experienced their largest recorded decline in 2020, with an estimated 2.5% year-on-year (y-o-y) decrease in consumption (about 100 bcm). The decrease in gas demand was caused by a combination of mild weather in Europe and North America, requiring less heating, and the impact of the COVID-19 pandemic on gas demand in the first half of year. LNG demand was also impacted, due to cancelled or delayed LNG shipments during the summer months of 2020.
Overview of the global LNG market in 2020
According to the IEA, global LNG trade (net of re-exports) expanded 2% in 2020. After positive results in the first quarter (Q1), when trade volumes increased by 11% y-o-y, LNG flows fell by 1% in Q2 and 3% in Q3, before recovering at a rate of 1% y-o-y in Q4.
In Asia, LNG demand increased sharply in late 2020. The growth in LNG imports in 2020 was led by China, up 12%, and India, up 15%. LNG imports into the rest of Asia were marked by declines in Japan (-3%), Indonesia (-31%) and Pakistan (-5%). These declines were largely offset by continued growth in Thailand (+18%), Bangladesh (+19%), Chinese Taipei (+8%) and other Asian importers.
Europe recorded a 16% y-o-y increase in LNG inflows in the first half of 2020. However, imports fell by 22% y-o-y in the second half of the year, resulting in a 3% decline for the year as whole.
LNG imports to the rest of the world decreased by 8% in 2020, mainly driven by a sharp decline in Mexico as a result of increased pipeline gas imports from the United States.
North America led the global growth in LNG exports in 2020 with a 35% y-o-y (17 bcm) increase in export volumes. The 40% expansion of US liquefaction capacity over the year was sufficient to offset the negative impact of widespread cargo cancellations, capacity shut-ins at US terminals and extensive outages.
Qatar, Russia and Australia increased their LNG exports in 2020.
Forecasts for the global LNG market in 2021
Traditional gas suppliers via pipelines benefited from a decline in LNG imports in the second half of 2020. According to the IEA, this will impact LNG trade in 2021. Global LNG trade is thus projected to increase by only 3% in 2021.
In 2021, growth in LNG imports will be driven by the Asia Pacific region, which will increase LNG inflows by 6%. European LNG imports are also expected to remain high, albeit below the levels observed in 2019 and 2020.
In 2021, North America will continue to lead the expansion of global LNG exports, with a projected 33% increase in output.
The rest of the world will experience an overall decline in LNG exports. The IEA believes that small increases in Africa, Central and South America will not be enough to offset continuing declines in the Asia Pacific region, largely driven by Malaysia.
IEA (2021), Gas Market Report, Q1-2021, IEA, Paris https://www.iea.org/reports/gas-market-report-q1-2021