Over the next five years, global demand for natural gas will rise at an average annual growth rate of 2.7% according to a report from the International Energy Agency (IEA) entitled Medium-Term Gas Market Report 2012. The projected growth rate is more than 10% higher than the projected average annual growth of 2.4% in last year’s report.
The IEA predicts that Chinese demand for natural gas will double in the next five years and that the country will become the world’s third largest importer of natural gas, trailing only Europe and Asia Oceania (primarily Japan and Korea). The US is predicted to become a net exporter of natural gas in the form of liquefied natural gas (LNG) and Japanese imports are expected to rise by an amount that will be determined by the country’s nuclear generation policies.
The “Golden Age of Gas” has already begun in the US, “but its continued expansion worldwide depends on producing gas and bringing it to the market in a way that is friendly to investors and society as a whole.” The IEA released a report last week, Golden Rules for a Golden Age of Gas, that outlines the agency’s view on how shale gas development out to be conducted world wide.
The agency notes that future supply growth will come from the countries of the former Soviet Union and North America, with shale gas development “concentrated” in China and Poland. Other findings include:
- A quarter of new gas demand will come from China, another quarter from the Middle East and other Asian countries together, and a fifth from North America.
- Low gas prices will result in gas generating almost as much electricity as coal in the United States by 2017.
- Global gas trade will expand by 35%, driven by LNG and pipeline gas exports from the [former Soviet Union] region; most of this expansion occurs from 2015 onwards, following a period of further tightening of global gas markets.
- Natural gas is the most important commodity with no global market price yet. Divergence among regional gas prices will decline but remain a feature of global gas markets. The emergence of a spot price in Asia would aid regional producers and buyers.
US demand for natural gas is expected to grow from about 24 trillion cubic feet in 2011 to about 27.5 trillion cubic feet in 2017, driven by a 66% increase in demand for gas to generate electricity. Chinese demand is forecast to grow to more than 96 trillion cubic feet in five years, up from about 46.6 trillion cubic feet in 2011.
Total global demand is expected to rise to 139 trillion cubic feet in 2017, up from about 119 trillion cubic feet in 2011.