European gas imports by pipeline were relatively stable in H1 2020 but down 19% year on year
Monthly pipeline gas flows to Europe were surprisingly quite stable in the first half of 2020, with a minimum estimated at 20.6 bcm in May against a maximum 23.1 bcm in March. However compared to last year, pipeline imports were down by 18% in the first quarter and 20% in the second quarter. Overall, European pipeline imports stood at 130 bcm in the first semester of 2020, an estimated 30 bcm (-19%) decline compared to the same period last year. Remarkably, daily flows remained below the minimum recorded in the 2016-2019 period on almost every day of the semester.
Global LNG trade remained stable year on year in May 2020 amid extremely depressed prices
Global LNG net imports* were up 0.46 Mt in May 2020 compared to April and essentially stable year-on-year (-0.2%) after a 2% Y-o-Y decline in April. These figures contrast with the 11.5% Y-o-Y growth recorded in Q1. Global net imports in May were 13% below January’s which demonstrates a certain level of supply response to low prices but is also largely a seasonal phenomenon. Indeed, in the five year period between 2015 and 2019, the decline in monthly imports from January to April has varied from -20% in 2015 to -6% in 2017.
LNG exports in May 2020 represented approximately 82% of the global liquefaction installed capacity which was only marginally lower than the average capacity utilization at this time of the year over the 5 previous year. They increased by 1% compared to May 2019, with the largest increases in the United States, Nigeria, Algeria and the Russian Federation, reflecting higher capacity utilization in the latter three countries and the launch of a number of new liquefaction trains in 2019 and early 2020 in the United States, where nominal liquefaction capacity increased from 34 to 65 Mtpa between May 2019 and May 2020.
In 2019, slower economic growth, Chinese policy changes and a mild winter caused global gas demand growth to slow in a context of oversupply, resulting in a growing LNG surplus and much lower prices. The growth in natural gas demand has slowed down from 5% in 2018 to 2.3% in 2019, returning to the average annual growth rate observed since the start of the century. The main factor behind growth was the switching from coal and oil to natural gas in the power and industry sectors, which was prompted by the competitiveness of natural gas thanks to a growing abundant low-cost supply. This was notably the case in the United States, Europe and some Asian emerging countries. Thus, natural gas has remained the main beneficiary of the energy demand growth, to the detriment of coal in particular, causing its share in the energy mix to expand further.