Natural gas will grow at 2.4% per year between now and 2018, the International Energy Administration said in its Medium-Term Gas market report issues on June 20. The growth estimate was revised downwards from 2.7% last year, due to continuous demand weakness in Europe as well as difficulties in upstream production growth in the Middle East and Africa.
Agency analysts expect gas will emerge as a transportation fuel, driven by a supply boom in North America and air pollution concerns, especially in China.
Amid more stringent environmental policies, China is expected to account for 30% of the global gas demand growth. In the next 5 years, China is expected to absorb the entire production increase from Central Asia as well as one-third of the global increase in LNG supply.
Russia, in the longer term, is expected to maintain its position in gas markets by developing the resources and infrastructure for large-scale Asia exports.
“Once the infrastructure barriers are tackled, natural gas has significant potential for clean-energy use in heavy-duty transport where electrification is not possible,” said IEA Executive Director Maria van der Hoeven.
However, despite the growing role of gas in the global primary energy mix, gas face challenges in all the major geographic regions. In the US, gas is losing some of its share of the power market due to low coal prices and the absence of policy constraints on coal-fired plants. Gas demand in Europe is hindered by weak economic conditions and low carbon prices.
“The persistent tightness of LNG markets is a major concern as it limits the contribution of gas to sustainable energy security,” Van der Hoeven said. “’It also highlights the need to tackle energy subsidies and improve energy efficiency in major producing countries as well as to adopt supportive policies for LNG investment.”