Advocacy

Pipeline gas export volumes increased by 6% in 2021, mirroring the rebound of global economic activity. Europe’s pipeline imports rose by 0.5% in 2021, supported by an increase in volumes flowing from Algeria. Africa’s pipeline exports to Europe climbed 50%, with Algeria seeing a significant increase in volumes exported to Spain and Italy.

Global LNG trade grew by 4.5% from 2020 to 2021, reaching an all-time high of 372.3 MT. A strong post-pandemic recovery resulted in a surge in LNG imports, even though the annual growth rate of 4.5% remains far from pre-COVID-19 levels of 13.0% in 2019.

While true of many commodity markets in 2021, price volatility in global LNG and European gas markets also increased significantly year-on-year. In the winter season, prices became so high and volatile that the number of market participants trading LNG dwindled and market activity in key demand regions declined. 2022 largely showed the same dynamic in Q1, although exchanges also hiked margin requirements for derivatives contracts, making it more difficult to manage price risk as well as tying up more credit and further reducing trading opportunities.

In the near-term, using gas instead of coal and oil allows for immediate drops in emissions in both greenhouse gases and air pollutants. It also enables greater shares of renewable energy deployment, as a valuable grid balancing tool – necessary for mitigating longer periods of renewable intermittency.

China’s strong economic comeback in 2021, coupled with unusually cold weather in Europe and Russia, caused global gas demand to rise from 3,753 Bcm in 2020 to about 3,913 Bcm in 2021, representing a 4.3% increase. Demand for gas in India, the Middle East and North Africa climbed by about 5-8%, largely driven by the power and industry sectors, due to renewed growth in economic activity and ongoing coal-to-gas switching.

2021 saw a “perfect storm” hit the global gas market, with a cold winter, recovery from Covid, especially in Asia, pandemic related LNG supply chain issues and latterly, in Q4 of 2021, reductions in Russian pipeline gas flow volumes. Spot prices increased through the year, and this continued into 2022, exacerbated by the Russia-Ukraine conflict.

For the first time five years the spot LNG percentage declined, to 34% in 2021 from 35% in 2020, with the growth in LNG trade being largely accounted for by contracted LNG – both OPE and hub-indexed. Unsurprisingly, spot LNG imports are predominant in the Asia and Asia Pacific regions.

The OPE category is not particularly large in terms of domestic production and was unchanged between 2020 and 2021. In 2021 the RSP category gained share with more rapid demand growth in Middle East, Asia Pacific and FSU.