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NorthAmOil COMMENTARY NorthAmOil

in 2040, versus 97.9mn bpd last year. use under STEPS, the IEA said. But economic
In DRS, consumption does not get back to fallout from the pandemic will limit how much
the pre-pandemic level until 2027 and flattens funding is available to major gas consumers.
at just under 100mn bpd. Under SDS, mean- What is more, this is the IEA’s first outlook to
while, demand contracts greatly to 92.5mn bpd predict a decline by 2040 in gas demand in
in 2025, 86.5mn bpd in 2030 and 66.2mn bpd advanced economies under STEPs. Gas will face
in 2040. stiff competition in these markets from renew-
ables. In the EU, demand will not return to the
Gas 2019 level, even though gas will benefit from the
Gas demand will decline by only 3% this year, retiring of coal and nuclear plants in countries
according to the IEA, though this still represents such as Germany.
its biggest contraction since emerging as a major In DRS, demand will take until 2024 to
fuel in the 1930s. Gas has proved more resilient rebound to the level in 2019, as weaker power
than oil, as less gas use in commercial and public consumption and subdued industrial activity
buildings has been countered by increased res- drag on growth rates. Gas exporters will also
idential consumption. A decline in industrial struggle from low prices and “a delayed recov-
demand was meanwhile offset by oil/coal-to-gas ery also casts a long shadow over the econom-
switching. ics of already sanctioned gas projects expected Less gas use
Its outlook is also far stronger than for oil. to come online in the next few years,” the IEA
Under STEPS, consumption will surge by 15% said. in commercial
by 2030 and 30% by 2040, reaching 5.221 trillion Revenue constraints will also mean less is and public
cubic metres. This growth will mostly be driven spent on infrastructure developments in coun-
by gains in South and East Asian countries look- tries with the most growth potential. In the DRS buildings has
ing to improve their air quality and support an demand, consumption will grow by only 24%
expansion in manufacturing. Gas will have a by 2040. been countered
25% share of the global primary energy mix in In SDS, gas demand rises by only 3.5% to
2040, versus 23% last year. 4.166 tcm by 2025 and will then begin declining by increased
Still, rates of growth will depend greatly on in the late 2020s, sliding back to 3.998 tcm in residential
policy, the IEA notes. 2030 and 3.554 tcm in 2040. Even in this sce-
“Gas faces significant uncertainty as these nario, however, gas will retain the same share in consumption.
economies emerge from the COVID-19 crisis,” primary energy consumption in two decades’
the agency said. “Despite a lower price outlook, time that it had last year.
growth prospects for gas continue to rely heavily “There is a robust long-term case for gases in
on policy support in the form of air quality reg- the energy system. In the SDS, there are services
ulations or other restrictions on the use of more that gases provide that it would be difficult to
polluting fuels, and on significant investment in provide cost effectively using other sources,”
new gas infrastructure.” the IEA said, citing “high-temperature heat for
Some $70bn per year will be needed to industry, winter heat for buildings and seasonal
expand infrastructure to enable greater gas flexibility for power systems.”™

P12 www. NEWSBASE .com Week 42 22•October•2020