BAKU, Azerbaijan, June 24
By Leman Zeynalova – Trend:
Production from natural gas fields, which was initially expected to rise to 3,687 billion cubic meters (Bcm) this year from 3,521 Bcm in 2019, is expected to reach 3,445 Bcm instead, recovering to 3,485 Bcm in 2021 and further to 3,551 Bcm in 2022, Trend reports with reference to Rystad Energy.
Natural gas output, which was previously set to grow, is set to decline by 2.6 percent this year, Rystad Energy forecasts.
The most affected output in percentage terms is the one of associated gas, which was initially forecast to stay largely flat year-over-year from the 2019 level of 547 Bcm. It is now expected to fall to 517 Bcm instead in 2020, rising to 530 Bcm in 2021 and 542 Bcm in 2022. Associated gas will likely only again exceed 2019 levels from 2023 onwards.
“Part of the recovery will be driven by optimism in future oil prices, which could gradually drive output from associated gas fields to near 600 Bcm by 2025. But how future oil prices really evolve will actually define the total natural gas output,” says Rystad Energy’s Head of Gas and Power Markets Carlos Torres-Diaz.
While global gas demand for 2020 has been revised down to 3,883 Bcm due to the impact of Covid-19, a jump in consumption during 2021 as a result of continued low prices and recovering economic performance could lead to a tighter balance. Currently, the production forecast for 2021 is 4,015 Bcm, meaning that if demand grows more than 3 percent, the balance could tighten significantly. This would subsequently lead to higher prices, which could trigger a supply response.
“Our current price forecast for 2021 suggests Henry Hub prices will average $2.7 per MMBtu and TTF prices $3.6 per MMBtu. The upside risk for global gas prices has increased as investments for projects are delayed,”
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