Three major transformations are set to shape the evolution of global natural gas markets in the next five years, setting the scene for the IEA Gas 2018 market outlook:
• The People’s Republic of China (hereafter, “China”) becomes the world’s leading importer of natural gas. Driven by continuous economic growth and strong policy support to curb air pollution, China accounts for 37% of the global increase in natural gas consumption between 2017 and 2023, more than any other country. As domestic production cannot keep pace, China becomes the world’s largest natural gas importer by 2019 and with 171 billion cubic metres (bcm) of imports by 2023, is mostly supplied by liquefied natural gas (LNG).
• Compared with the previous decade, the industrial sector takes the lead from power generation as the main driver of global growth in demand for natural gas. Emerging markets, primarily in Asia, account for the bulk of this increase with uses as a fuel for industrial processes as well as for feedstock for chemicals and fertilisers. Industrial gas demand also grows in major producing regions, such as North America and the Middle East, to support expansion of their petrochemicals sectors.
• The United States is the source of much of the growth in natural gas production and most of the additional LNG exports. The United States, already the world’s top producer, accounts for almost 45% of the growth in global production and nearly three-quarters of LNG export growth. The development of destination-free and gas-indexed US LNG exports provides additional flexibility to the expanding global LNG market.
China and emerging Asian markets drive growth in global natural gas consumption growth 2017 was a year of strong growth for natural gas, mainly driven by China. Global natural gas demand grew by 3%, the highest increase since 2010. China, where demand grew 15%, accounted for nearly a third of the global increase, driven by a determined policy effort to improve air quality through coal to gas boiler conversions in the residential and industrial sectors. This led to an unprecedented surge in LNG imports, placing China as the world’s second largest LNG importer after Japan.
The global natural gas market passes the 4 trillion cubic metres (tcm) mark by 2022, with an expected average annual growth rate of 1.6% throughout the forecast period. Emerging Asian markets, led by China, account for more than half of the growth in global natural gas consumption to 2023.
China becomes the largest natural gas importing country in the world by 2019, leading emerging Asian gas market growth. An increasing role for natural gas – defined as a clean energy source – in every sector of China’s economy is backed by strong policy support from the 13th Five-Year Plan. China’s demand grows at an average of 8% per year throughout the forecast period, accounting for over a third of global demand increase. The share of imports in China’s supply rises from 39% to 45% over the forecast period. Other emerging Asian economies increase their natural gas consumption for industry (including fertilisers and petrochemicals) and power generation, and develop their domestic markets and infrastructure to import more LNG. (Source: IEA – Image: Cooking with gas flare in Nigeria/Ed Kashi/World Bank)