Natural gas is certainly set to play a central role in meeting the world’s energy needs for at least the next two‐and‐a‐half decades.
Natural gas is certainly set to play a central role in meeting the world’s energy needs for at least the next two‐and‐a‐half decades. Global natural gas demand, which fell in 2009 with the economic downturn, is set to resume its long‐term upward trajectory from 2010. It is the only fossil fuel for which demand is higher in 2035 than in 2008 in all scenarios, though it grows at markedly different rates. In the New Policies Scenario, demand reaches 4.5 trillion cubic metres (tcm) in 2035 — an increase of 1.4 tcm, or 44%, over 2008 and an average rate of increase of 1.4% per year. China’s demand grows fastest, at an average rate of almost 6% per year, and the most in volume terms, accounting for more than one‐fifth of the increase in global demand to 2035. There is potential for Chinese gas demand to grow even faster than this, especially if coal use is restrained for environmental reasons. Demand in the Middle East increases almost as much as projected in China. The Middle East, which is well‐endowed with relatively low‐cost resources, leads the expansion of gas production over the Outlook period, its output doubling to 800 billion cubic metres (bcm) by 2035. Around 35% of the global increase in gas production in the New Policies Scenario comes from unconventional sources — shale gas, coalbed methane and tight gas — in the United States and, increasingly, from other regions, notably Asia‐Pacific. The glut of global gas‐supply capacity that has emerged as a result of the economic crisis (which depressed gas demand), the boom in US unconventional gas production and a surge in liquefied natural gas (LNG) capacity, could persist for longer than many expect. Based on projected demand in the New Policies Scenario, we estimate that the glut, measured by the difference between the volumes actually traded and total capacity of inter‐regional pipelines and LNG export plants, amounted to about 130 bcm in 2009; it is set to reach over 200 bcm in 2011, before starting a hesitant decline. This glut will keep the pressure on gas exporters to move away from oil‐price indexation, notably in Europe, which could lead to lower prices and to stronger demand for gas than projected, especially in the power sector. In the longer term, the increasing need for imports — especially in China — will most likely drive up capacity utilisation. In the New Policies Scenario, gas trade between all WEO regions expands by around 80%, from 670 bcm in 2008 to 1 190 bcm in 2035. Well over half of the growth in gas trade takes the form of LNG.