Theodore Pelagidis
Professor, University of Piraeus-Dept. of Maritime Studies
Antonios Stratakis
PhD Candidate, University of Piraeus-Dept. of Maritime Studies


It is a matter of fact that COVID-19 pandemic will bring an economic recession which in many aspects will be more severe than the global financial crisis we have all witnessed in the years followed 2008, comparable to the Great Depression of 1929. According to the latest estimations, World Bank predicts that world GDP will shrink by 5% in 2020.[1] Indicatively, the US economy will decline by 6%,[2] Japan’s by 5.5% while, on the contrary Chinese[3] and Indian economies will slightly grow by 1% and 1.5% respectively (economic slowdown).  Moreover, in Eurozone it is predicted that a GDP decline ranging between 8%-12% will take place in 2020 as most European economies will be severely hit (Germany -6.5%, France -8%, Italy -9% and Great Britain -6%). Τhe best case scenario implies the return of economic growth -achieving rates of 5% – in most countries by 2021 while the worst case scenario predicts that global economy is going to remain in the doldrums for the next five years at least. All things considered, the so-called ‘restart’ of global economy is not expected any time soon.


With such an economic uncertainty, there is an indisputably negative impact on global energy demand, production and prices, as well as to countries whose economies are heavily depended on energy exports. For example, Saudi Arabian economy – the world’s biggest oil producer – will decline by 2% in 2020, while Russian economy will also decline by 5.5%. World oil demand in 2020 is expected to significantly decrease by 9.1 mb/d to average 90.6 mb/d (99.7 mb/d in 2019).[4] On the other hand, world oil production is expected to hover around 89- 91 mb/d, as OPEC[5] and non-OPEC members will proceed on extended production adjustments as a mean to rebalance market prices in the short term.[6] So far, the continuing growing oil surplus in the spot market and accumulating unsold cargoes have resulted in historical plummeting of crude oil prices (spot and futures).


In the relative gas sector the situation is not better[7]. According to International Energy Agency, during 2020 the industry will experience the largest recorded demand shock in the history of global natural gas markets, as gas consumption is expected to fall by 150 bcm (a 4% decline).[8] The major consumption decline is expected in mature markets across Europe, North America and Asia. As expected, LNG trade –the main driver of global gas trade, is not going to be unaffected, despite the fact that 2019 was a robust year for the industry where 12% growth, new additional capacity of almost 95 bcm and investments of $65 billion in LNG export projects were recorded.[9] Although the impact of lower demand is not yet fully visible in supply-side indicators,[10] it is inevitable for natural gas markets to go through strong supply and trade adjustments as a result of historically low spot prices (below 2$/MBtu) and high volatility. Natural gas demand is expected to progressively recover between 2021-2025, however, the Covid-19 crisis will have long-lasting impacts on natural gas markets resulting in 75 bcm of lost annual demand by 2025, as the main medium-term drivers are subject to high uncertainty.


Europe remains the second largest natural gas importing market after Asia.[11] Until May 2020, natural gas flows to Europe (LNG and pipeline) have decreased by 9% y-o-y, mainly attributed to 25% less Norwegian and 4% less Russian/North African pipeline flows respectively. On the contrary, LNG imports increased by 20% y-o-y to reach 60 bcm, as USA became the largest supplier to Europe (25% market share), overtaking Qatar and Russia.[12] In the short term, there will be an additional pipeline trade principally through the progressive ramp-up of export infrastructure from Eurasia (TANAP and TAP) to Europe. All things considered and despite declining domestic production, Europe seems to be energy sufficient at least for the next five years and it is expected to continue playing a key role in balancing the global gas market.


The aforementioned analysis and projections highlight the need for adopting a realistic approach in terms of exploiting South-East Mediterranean gas reserves. On this stage, the possibility of proceeding with the construction of EastMed pipeline seems to lose ground, as its high construction cost, certain technical odds and low market prices would squeeze profit margins, making the project commercially unviable and less competitive. Alternatively and as LNG imports to Europe are gaining momentum, there is an ongoing trend pilling up across the Mediterranean that contains investment in large, mid and small-scale offshore LNG terminals,[13] backed by EU grants in an effort to advance European policies of energy independence and security – lessening dependence on gas transported by pipeline from Russia.


LNG terminals provide a safer and cheaper option of exploiting gas deposits contrary to pipelines (millions instead of billions invested), as converted LNG vessels of capacity between 150.000 to 250.000 cbm are being used as Floating Storage and Regasification Units. The above leads to production security, independence from geopolitical factors, immediate adjustment to demand spikes, transport flexibility and guaranteed return as commercial LNG vessels can be long-term chartered to deliver shipments all across the globe. Furthermore, the promotion of an LNG terminals network between Greece, Cyprus and Israel, would lead to competitive advantages and the establishment of a new geopolitical status-quo in the region. Under that scope, Greek and Cypriot maritime cluster could play a vital role by providing a modern and cutting edge technology LNG fleet as well as integrated and wide esteemed shipping management practices.

[1] Kathimerini 7/6/2020 “The Greatest Depression in the last 90 Years”


[2] Analysts estimate that US economy will lose $7.9 trillion by 2030.

[3] China will face its lowest economic growth since 1976 while commercial tensions with USA remain.

[4] HSN 18/6/2020 “OPEC: World oil demand expected to decline 6.4 million barrels per day in second half of 2020”,


[5] HSN 3/6/2020 “OPEC-led production cuts will likely pack a punch in lifting oil prices”


[6] OPEC Monthly Oil Market Report June 2020


[7] After two years of very strong gains, natural gas consumption growth cooled in 2019 with an increase estimated at 1.8% y-o-y (70 bcm) – Asia Pacific and North America hold the lion share in consumption.

[8] IEA Gas Report June 2020 (

[9] In the first five months of 2020 global LNG trade volumes were up by 8.5% y-o-y while.

[10] US domestic gas production and global LNG supply are still increasing compared to 2019, while Russian production and European imports show some decline.

[11] In 2019 Europe imported 115 bcm of LNG (record level).

[12] By 2025, European LNG imports are expected to return to modest rates of 90 bcm annually.

[13] Floating LNG ratchets up in the Mediterranean – 15/04/2020