The coronavirus is set to alter global natural gas markets that are already in the midst of transformation, per a new Center for Strategic and International Studies analysis.
What's next: Via CSIS's Nikos Tsafos, one of the trends to watch is demand. It'll be affected, but the extent depends on "how much is activity falling due to GDP, how much is gas privileged or disadvantaged relative to other fuels, and how will people adapt their behavior to protect their health."
Production: Watch three key global suppliers as prices remain depressed — Russia, Qatar and the United States. "[G]as faces a tough 2020 with declining demand and prices and no supplier with a clear impetus to reduce production. We can expect things to get worse for suppliers until someone blinks."
Infrastructure: Illness risks are already affecting some petrochemical and LNG projects, though there's still incentive to build as fast as possible to start earning returns. "[S]afety concerns might slow things down, and projects might come online later than expected," he writes.
Investment: It's likely that fewer projects get green lights in 2020. The longer-term is cloudier and location-specific. In some advanced economies, stimulus plans may "point away" from gas in favor of climate efforts. "But in places around the world where gas use could advance a country’s low-carbon pathway, we can expect power plants, pipelines, and port facilities to get an extra push."
Market structure: The crisis could spur changes in contract and pricing practices. One place to watch is China, a mammoth importer of LNG. "[A] prolonged crisis will test Chinese buyers and their willingness to abide by terms conceived and created in a market long before they were participants." (March 27, 2020)
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