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Cedigaz: Medium and long-term natural gas outlook 2016

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LNG Industry,

CEDIGAZ has released its “Medium and Long-Term Natural Gas Outlook 2016”. The work highlights the growing role of natural gas as a bridge fuel towards a long-term increasingly renewable-based, efficient and sustainable energy system.

The work expects the future expansion of natural gas to be driven by the implementation of energy and environmental policies that aim to move away from coal and oil.

Highlights from the report include:

  • Natural gas demand is projected to grow by 1.6%/yr over 2014-2035, driven by emerging markets, where natural gas is making substantial inroads in power generation and industry.
  • Looking to 2035, the total primary energy consumption is forecast to grow at a moderate rate of 1%/yr in a context of increased energy efficiency. Global energy intensity is forecast to decline by 2.5%/yr.
  • In this context, gas stands as the fastest-growing fossil fuel over 2014-2035 (+ 1.6%/year). In contrast, the growth of oil and coal is expected to slow sharply, with respective annual rates of 0.2% and 0.1%.
  • Natural gas will increase its relative share in the global primary energy supply from 21.4% in 2013 to 23.9% in 2035.
  • The pace of gas demand growth has been revised downwards compared with Outlook 2015. INDCs ahead of COP21 have been taken into account. In Europe in particular, the 2030 Climate & Energy Package leaves little room for gas demand growth in volume terms.
  • Virtually all of the additional energy is consumed in emerging economies and 85% of gas growth come from emerging economies. The US is the only industrialised market to record a significant growth in gas consumption in volume terms, thanks to the competitiveness of shale gas and the adoption of the Clean Power Plan.
  • China and the Middle East lead the way in gas demand growth, accounting for respectively 27% and 25% of the incremental volume over the projection period.
  • The power sector remains the main powerhouse behind gas expansion. Natural gas makes substantial inroads into the power generation mix in China, the US, Russia, the Middle East and Africa in particular.
  • Substantial growth in gas use in the manufactured Industry is also expected in the Middle East, China, India, Latin America, Southeast Asia, and also the US.
  • On the national scale, the US, China, Iran, Australia and Russia are expected to show the largest production gains.
  • On emerging markets, implementing regulatory and price reforms is critical to boost investments in E&P (including unconventional gas).
  • Unconventional gas will provide more than two-thirds of global additional supply and will account for 34% of global gas output in 2035, up from 20% in 2014.
  • LNG increases rapidly after 2020. International LNG trade is set to increase by 3.4%/year to 2035. The share of LNG in interregional flows will progress from 47% in 2014 to 53% in 2035.
  • North America emerges as a large-scale exporter, covering 18% of total net interregional exports by 2035, at the expense of the Middle East and the CIS.
  • LNG will lead to a growing internationalisation of gas markets with flexible LNG and hub pricing expanding in Europe and Asia, supported by US LNG.

Edited from press release by

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