Skip to main content

LNG will continue to replace coal and oil

LNG Industry,


The share of liquefied natural gas (LNG) in the global energy mix is set to increase from the current level of 23.5% to 26% over the next few years, thanks to growing environmental concerns. This comes from Dr Hossein Adeli, the Secretary General of the Gas Exporting Countries Forum (GECF).

“The 21st century is the era of LNG, and the share of coal and oil will continue to decline in favour of gas and renewables,” explained Adeli at the GECF headquarters.

“The growing awareness campaign and louder voices about greenhouse gas emissions and global warming at different forums, including Intergovernmental Panel on Climate Change (IPCC), have made the world more conscious about the environment forcing economies to substitute coal and oil with cleaner fuels such as gas,” Adeli continued.

Shale gas revolution
When asked about the shale gas revolution and its implications on investments in conventional energy, Adeli commented: “Shale gas accounts only 2% of the total gas production, which is estimated to reach up to 10% over the next decade. However, it suffers from many shortcomings such as technology, know-how, water contamination and others. So the investments in the conventional gas will continue to be robust.”

In the current global energy mix, coal has the largest share of 33-34%, followed by oil and gas. However, the share of coal is expected to decrease to 29% over the next ten years, replaced by gas and other renewable forms of energy, that currently accounts for almost 10% of the global energy mix.

Gas market prices
Commenting on the determinants of gas prices in the international market, Adeli explained that gas does not have a global market, but instead has regional and local markets due to the nature of the product.

Adeli continued to explain that gas is traded through different ways such as pipeline trade, where you have single buyer and single seller, with few market forces working to influence the price. Other forms of gas trade include long-term LNG contracts and LNG on spot.

“Barring the spot market, in the other two forms of LNG trade, prices are relatively less competitive, especially compared to oil market,” Adeli said. He went on to say that oil- or alternative fuel-linked LNG prices will continue to remain in place as long as buyers want to feel secure about supplies.

About GECF
Established in 2008, GECF was set up as an international governmental organisation to combine the world’s leading gas producers. The GECF’s 17 member countries, including four observer members, together control over 70% of the world’s natural gas reserves, 38% of the pipeline trade and 85% of the LNG production.

Adapted from press release by Katie Woodward

Read the article online at: https://www.lngindustry.com/liquid-natural-gas/21012014/lng_to_replace_coal_and_oil_65/


 

Embed article link: (copy the HTML code below):