While more LNG will be available there will be deferred investment in LNG supply in a low oil price environment, bringing a risk of tighter markets in the 2020s.
"If the recent trend of rising costs for some greenfield LNG liquefaction plants is not turned around, then the long-term competitiveness of gas in many importing markets could be threatened," the IEA said.
"Floating LNG facilities offer a potential way to reverse this trend and to develop otherwise stranded resources, but the technology has yet to prove itself in terms of operational reliability and cost," it added.
The report finds that the plunge in oil prices has set in motion the forces that lead the market to rebalance, via higher demand and lower growth in supply, although the adjustment mechanism in oil markets “is rarely a smooth one.”
The IEA forecasts that a tightening oil balance leads to a price of around $80 per barrel for North Sea Brent by 2020.
However, the report also examines the conditions under which prices could stay lower for much longer.
“Since prices at today’s levels push out higher-cost sources of supply, such a scenario depends heavily on the world’s lower-cost producers,” the report said.
“Reliance on Middle East oil exports eventually escalates to a level last seen in the 1970s. Such a concentration of global supply would be accompanied by elevated concerns about energy security, with Asian consumers - the final destination of a huge share of regionally-traded oil - particularly vulnerable,” it said.
The developing Asian region, where India takes over from China as the largest source of consumption growth, is the leading demand centre for every major element of the world’s energy mix in 2040 - oil, gas, coal, renewables and nuclear.
By 2040, China’s net oil imports are nearly five times those of the United States, while India’s will easily exceed those of the European Union.
“Now is not the time to relax," said IEA Executive Director Fatih Birol. "Quite the opposite. A period of low oil prices is the moment to reinforce our capacity to deal with future energy security threats,” he said.
The report also underlines that the single largest energy demand growth story of recent decades is near its end.
“China’s coal use has reached a plateau as its economy rebalances and overall energy demand growth slows, before declining,” the report added.