BAKU, Azerbaijan, April 2
By Leman Zeynalova – Trend:
With consumers constrained in their ability to respond to lower prices, adjustment in the gas market may also need to come in the form of halting some gas supply, Trend reports citing the International Energy Agency (IEA).
IEA said in its report that gas demand is less exposed to the immediate effects of the current crisis than oil demand because of its relatively limited use for transport.
“But industrial and power demand for gas will still be affected by the lockdowns and the ensuing economic slowdown. Suppliers with the highest short-term costs of production and those who rely on spot sales are among the most vulnerable,” reads the report.
Changes in oil markets ripple across all parts of the energy sector, with implications for a range of different fuels and technologies, according to IEA.
“A sustained period of low oil prices would affect the prospects for clean energy transitions, easing some aspects of this transformation – such as the removal of fossil fuel consumption subsidies – while complicating others,” said the report.
“One of the clearest spillover effects is on natural gas because of the links between oil and gas prices that remain in many long-term gas supply contracts. This linkage had been offering a measure of shelter for some suppliers, but it is now set to disappear over the typical 6-9 month period in which movements in oil prices filter through into natural gas contract prices. The precise implications will vary from company to company. But oil at $25 a barrel would leave some international gas suppliers struggling to cover their operating costs, and the depressed spot market for gas would not provide any relief.”
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