Global natural gas supply and demand are tightly balanced, and gas prices may remain medium-high

Global gas supply and demand have maintained a tight balance in recent years

According to BP data, the global natural gas supply and demand have been basically balanced in the past decade, and the total global natural gas supply in 2021 will be 4,036.9 billion cubic meters, up 4.5% year-on-year, and the total demand will be 4,037.5 billion cubic meters, up 5.0% year-on-year, and the supply will be lower than the demand for the first time in nearly five years (-600 million cubic meters). In the past three years, the global capital expenditure on natural gas has been insufficient, and the space for capacity improvement is limited. According to the IEA, global average capital expenditure on natural gas in 2020-2022 is $249 billion, lower than the level of capital expenditure in 2015-2019. Among them, the global gas capital expenditure in 2022 was $272 billion, an increase of 8.1%, which still did not reach the level before 2019, and was only 77.6% of the 2015 level ($351 billion), and the lack of capital expenditure also reflects the limited space for future gas capacity improvement.

In recent years, the production of natural gas in the main production areas has shown a rising trend

Since 2015, natural gas production in major producing regions has been on the rise, according to BP data, global natural gas production is mainly concentrated in North America, Central Asia, the Middle East and the Asia-Pacific region, Production increased from 949.0, 754.3, 600.9 and 560.0Bcm in 2015 to 1135.8, 896.0, 714.9 and 699.0 Bcm in 2021, with CAGR of +3.0%, + 2.9%, + 2.9 and %+3.0%, respectively. By the end of 2021, North America, Central Asia, the Middle East and Asia Pacific accounted for 28.1%, 22.2%, 17.7% and 16.6% of global production, respectively.

Natural gas production is mainly concentrated in the United States, Russia, Iran and China

By region, North American production is mainly concentrated in the United States, and the natural gas production in 2021 will be 934.2 Bcm, accounting for 82.3%. Central Asian production is mainly concentrated in Russia, which will produce 701.7 Bcm of natural gas in 2021, accounting for 78.3%. In the Middle East, the production is mainly concentrated in Iran, Qatar and Saudi Arabia, and the natural gas production in 2021 will be 256.7, 177.0 and 117.3 Bcm, accounting for 35.9%, 24.8% and 16.4%, respectively. Production in the Asia-Pacific region is mainly distributed in China, Australia and Malaysia, with 209.2, 147.2 and 74.2 Bcm of natural gas production in 2021, accounting for 31.3%, 22.0% and 11.1%, respectively.

Natural gas demand continued to grow in most regions, with relatively significant growth in the Asia-Pacific region

According to BP data, since 2015, North America, Asia Pacific, Central Asia, Middle East and Europe, The demand increases from 934.7, 715.7, 527.5, 479.3 and 509.2 Bcm in 2015 to 1034.1, 918.3, 610.8, 575.4 and 571.1 Bcm in 2021, respectively. CAGR was +1.7%, +4.2%, +2.5%, +3.1% and +1.9%, respectively. By the end of 2021, North America, Asia Pacific, Central Asia, the Middle East and Europe accounted for 25.6%, 22.7%, 15.1%, 14.3% and 14.1% of the total global demand, respectively. 

Distribution of natural gas demand by region

The demand in North America is mainly concentrated in the United States, and the demand for natural gas in 2021 is 826.7 Bcm, accounting for 79.9%; The demand in Central Asia is mainly concentrated in Russia, and the demand for natural gas in 2021 will be 474.6 Bcm, accounting for 77.7%; The demand in the Middle East is mainly distributed in Iran, Saudi Arabia and the United Arab Emirates, and the demand for natural gas in 2021 will be 241.4, 117.3 and 69.4 Bcm, respectively. The top five countries in Europe are Germany, the United Kingdom, Italy, Turkey and France, and the demand for natural gas in 2021 will be 90.5, 76.9, 72.5, 57.3 and 43.0 Bcm, respectively. They accounted for 15.9%, 13.5%, 12.7%, 10.0% and 7.5% respectively. Among them, EU countries accounted for 67.8% of the demand.

From the use point of view, the world's natural gas is mainly used for power generation

According to the Australian Department of Industry, Science and Resources, 40% of the world's natural gas will be used in the power sector in 2020, which is the most important source of demand. The remaining residential, industrial and transportation needs accounted for 22%, 20% and 19%, respectively.

Global trade in natural gas continues to grow, with the bulk of the increase coming from LNG

According to BP, global gas trade volume increased from 781.7 Bcm in 2015 to 1,021.9 Bcm in 2021, at a CAGR of +4.6%. In terms of structure, the increase of global natural gas trade mainly comes from LNG, with a trade volume of 516.2 Bcm in 2021, and a CAGR of +7.0% in 2017-2021. At the same time, the proportion of LNG trade volume is also increasing year by year, accounting for about 50.5% in 2021, an increase of 7.4 pct compared with 2015. The overall trade volume of pipeline gas has remained stable since 2017 (except for a slight decline in 2020), achieving a trade volume of 505.6 Bcm in 2021, and a CAGR of -0.2% in 2017-2021.