Asian demand set to power growth

Thursday, 13 June 2019
Free Read

After another record year, global demand for natural gas is forecast to keep growing over the next five years.

This growth pattern will be driven by strong consumption in the fast-growing Asian economies and supported by the continued development of the international gas trade.

Natural gas demand grew by 4.6% in 2018, its fastest annual pace since 2010, according to the IEA’s latest annual market report, Gas 2019. Gas accounted for almost half the increase in primary energy consumption worldwide.

Demand is expected to rise by more than 10% over the next five years, reaching more than 4.3 trill cu m in 2024.

“Natural gas helped to reduce air pollution and limit the rise in energy-related CO2 emissions by displacing coal and oil in power generation, heating and industrial uses,” said Dr Fatih Birol, IEA’s Executive Director. “Natural gas can contribute to a cleaner global energy system. But it faces its own challenges, including remaining price competitive in emerging markets and reducing methane emissions along the natural gas supply chain.”

China is expected to account for more than 40% of global gas demand growth to 2024, propelled by the government’s plan to improve air quality by moving away from coal. Chinese natural gas consumption grew 18% in 2018 but is expected to slow to an average annual rate of 8% to 2024, due to slower economic growth.

The IEA also saw strong growth in gas consumption in other Asian countries, particularly in South Asia. In Bangladesh, India and Pakistan, the industrial sector is the main contributor to growth, especially for fertilisers to meet the needs of growing populations.

Industrial use of natural gas, both as a fuel and a feedstock, is set to expand at an average annual rate of 3% and account for almost half of the rise in global consumption to 2024.

Power generation remains the largest consumer of natural gas, in spite of slower growth, due to strong competition from renewables and coal.

LNG as fuel

Gas 2019 also focused on the role of LNG at sea, which is set to emerge as a fast-growing alternative fuel, due to stricter rules on sulfur content that take effect in January, 2020.

Supplies to meet growing global demand for natural gas will come from both new domestic production in fast-growing economies but also increasingly from major exporting countries, led by the development of abundant US shale gas resources.

The strong LNG export capacity growth will enable international trade to play a growing role in the development of natural gas markets, as they move towards greater globalisation.

Investment in LNG projects has rebounded in 2018 after several years of decline, and the large number of projects due to take final investment decision (FID) in 2019 is likely to further support trade and market expansion. However, more investment will be needed in the future.

The recent convergence in market prices in major regions gave an indication of the increasing globalisation of the natural gas trade. Establishing market-driven pricing mechanisms in fast-growing economies remains a challenge, however.

Recent reforms in major markets sent encouraging signals, but more will be required to ensure the sustainable market-driven development of natural gas in these economies, the report said. 

Related Video

Free Read