IEA sees annual gas demand growth at 1.5 pct

Global natural gas demand is projected to grow by 1.5 percent every year to 2040 with the markets, business models and pricing arrangements all in flux, according to IEA’s World Energy Outlook 2016.

The flexible global market, linked by a doubling of trade in LNG is expected to boost the role of gas in the global gas mix.

Gas consumption is forecast to increase almost everywhere, with the main exception of Japan, where it is expected to drop as nuclear power is reintroduced.

The largest source of growth are the Middle East and China, where the consumption is expected to grow by more than 400 billion cubic meters.

However, it is unknown how quickly the currently oversupplied gas market can rebalance, especially with another 130 billion cubic meters of liquefaction capacity under construction, primarily in the USA and Australia.

The Outlook expects the market to change from the previous system of strong, fixed-term relationships between suppliers and a defined group of customers, to a more competitive and flexible arrangements, including greater reliance on prices set by gas-to-gas competition.

This shift is predicted to come about due to the increasing availability of US LNG cargoes as well as new exporters that are scheduled to join the market in 2020s, notably, East Africa.

The FSRUs are forecast to enable the growth of smaller markets for LNG, whose overall share in long-distance gas trade grows from 42 percent in 2014 to 53 percent in 2040.

But uncertainty over the direction of this commercial transition could delay decisions on new upstream and transportation projects, posing the risk of a hard landing for markets once the current oversupply is absorbed, according to the outlook.

Related news

List of related news articles