IEA outlook: ‘Golden Age’ of gas to extend to China
The “Golden Age” of natural gas that has taken such a strong foothold in North America will extend to China over the next 5 years, driven by booming demand, according to the latest 5-year gas market outlook from the Paris-based International Energy Agency.
In its Medium-Term Gas Market Report 2014, IEA noted that a near-doubling of Chinese gas demand by 2019 will offset a slowdown in demand in other regions.
The annual report sees global demand rising 2.2%/year by the end of the forecast period compared with the 2.4%/year rate projected in last year’s outlook.
Much of this demand, IEA says, will be met by LNG as well as new pipelines. “In a shift away from the traditional dominance of state-owned suppliers, private-sector operators in Australia, Canada, and the US are taking the lead in the expansion of the LNG trade, which is expected to grow by 40% to reach 450 billion cu m (bcm) by 2019,” IEA said. “Half of all new LNG exports will originate from Australia, while North America will account for around 8% of the global LNG trade by 2019.”
IEA Executive Director Maria van der Hoeven noted that the world is entering “the age of much more efficient” gas markets “with additional benefits for energy security” as she presented the report at the Conference of Montreal.
Despite this projected demand and production rise, the director sees some flashing warning lights: “High LNG prices are threatening to crimp demand as many countries are increasingly unwilling, or unable, to afford these supplies—and that could open the door to coal,” she said, adding, “Looking ahead, unless we see timely investment in new production and LNG facilities and the reversal of the recent cost inflation of LNG, only a very strong climate policy commitment could redirect Asia’s coal investment wave to gas.”
Air-quality concerns in China are motivating the government to embrace tough plans to reduce pollution, and gas therefore is emerging as a major part of the solution.
China’s overall gas demand, IEA says, will continue to be driven by the power, industrial, and transportation sectors. Demand is expected to reach 315 bcm in 2019, an increase of 90% over the forecast period, the report said.
And while China will remain a “significant” importer, about half of its new gas demand will be met by domestic resources, most of them unconventional, IEA said. Production of unconventional resources in China are expected to reach 193 bcm in 2019 from 117 bcm in 2013.
