Global natural gas consumption growth averaged 2% in 2019, below its 10-year average and down sharply from the exceptional growth seen in 2018 (5.3%). In volume terms, demand grew by 78 billion cubic metres (bcm), led by the US (27 bcm) and China (24 bcm).
The growth in US and Chinese gas consumption was much slower than in 2018, as the boost from weather effects and policy driven coal-to-gas switching in China faded. A reduction in the number of unusually hot and cold days also contributed to a fall in Russia’s gas consumption (10 bcm) – the largest decline of any country last year.
Gas production grew by 132 bcm (3.4%) outpacing growth in consumption. The US accounted for almost two-thirds of net global growth, with the volumetric increase of 85 bcm just shy of 2018’s record increment (90 bcm). Supply was also boosted by strong growth in Australia (23 bcm) and China (16 bcm).
World proved gas reserves increased by 1.7 Tcm to 198.8 Tcm in 2019. China (2 Tcm) and Azerbaijan (0.7 Tcm) provided the largest increments, although this was partially offset by a 1.3 Tcm decline in Indonesian reserves. Russia (38 Tcm), Iran (32 Tcm) and Qatar (24.7 Tcm) are the countries with the largest reserves. The current global R/P ratio shows that gas reserves in 2019 accounted for 49.8 years of current production. The Middle East (108.7 years) and CIS (75.8 years) are the regions with the highest R/P ratio.
Much of last year’s increase in gas production was used to feed additional exports of liquefied natural gas (LNG). LNG exports grew by 54 bcm (12.7%) last year, the largest annual increase ever, driven by record increases from the US (19 bcm) and Russia (14 bcm) as well as continued growth from Australia (13 bcm).
On the LNG import side, nearly all incremental supplies headed to Europe, in contrast to 2018 when Asia drove import growth. European LNG imports rose by 49 bcm, representing an unprecedented 68% increase. Growth was widespread, with the UK (11 bcm), France (10 bcm) and Spain (7 bcm) the largest individual contributors.
The rapid growth in LNG led to a 4.9% increase in overall inter-regional gas trade, a rate more than double its 10-year average. This is despite a 1.7% decline in pipeline trade (-9 bcm) as pipeline imports into Europe from Russia and North Africa were partially crowded out by the abundance of LNG supplies.
With production growth outpacing growth in consumption by a considerable margin, storage levels rose in most regions and prices fell sharply. US Henry Hub prices dropped almost 20% to average $2.53/mmbtu, while European and Asian prices, as measured by the UK NBP index and the Japan Korea Marker, fell by more than 40% (averaging $4.47/mmbtu and $5.49/mmbtu respectively). Prices in Europe, the region most affected by LNG oversupply, fell to their lowest levels since 2004.