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Natural Gas May Enter 'Golden Age' on Chinese Demand, IEA Says
2010-11-09 10:00:00.3 GMT
By Ben Farey
Nov. 9 (Bloomberg) -- Natural gas may enter a "golden
age" led by demand increases in China and the Middle East as
new gas-fired power stations are built, the International Energy
Agency said.
Global gas demand may surge as much as 44 percent to 2035
over 2008 levels, reaching 4.5 trillion cubic meters a year (435
billion cubic feet a day) as China's use grows an average 6
percent a year annually, the adviser to developed nations said
in its World Energy Outlook 2010, published today.
"China could lead us into a golden age for gas," the IEA
said. "Demand in the Middle East increases almost as much."
Gas demand will return to growth this year after dropping
in 2009 in the wake of the economic crisis and global
oversupply, the Paris-based IEA said. Gas is the only fossil
fuel for which demand in 2035 is higher than in 2008 across all
of the IEA's three assumptions for climate legislation.
China produced about 85 billion cubic meters of gas last
year and consumed about 89 billion, according to BP Plc's
Statistical Review of World Energy. More than 70 percent of the
country's energy comes from coal, the most polluting fossil
fuel. The country has three operating LNG terminals, with
another 16 planned or proposed import facilities. It also
imports gas through a pipeline from Turkmenistan.
Middle Eastern gas use is likely to grow almost as fast as
in China, according to the IEA. Still, the region may double its
production to 800 billion cubic meters a year by 2035.
More than a third of the worldwide increase in production
over the quarter century is expected to come from so-called
unconventional gas deposits of shale, coal-bed methane and tight
gas, the IEA said. Such production will be concentrated in North
America, spreading to the Asia-Pacific region, the agency said.
Oil Price Indexation
A "gas glut" in supply capacity will exceed 200 billion
cubic meters next year, from 130 billion this year, the IEA
said, before starting "a hesitant decline." The agency defines
the glut as the capacity of inter-regional pipelines and LNG
export plants minus the volume of gas actually traded.
"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
expected, especially in the power sector," the IEA said.
In Europe, most gas is sold under multiyear contracts
linked to the cost of crude and oil products. Still, the fuel is
increasingly traded at hubs and priced independently from oil.
The IEA study assumes nations implement broad policy
commitments to climate change. The organization also looked at a
scenario assuming current climate legislation and one that
assumes steps to limit global warming to 2 degrees Celsius (3.6
degrees Fahrenheit).
For Related News and Information:
Top energy, gas stories: ETOP<GO>, TGAS <GO>
IEA news: NI IEA <GO>
Commodity Forward Price Curves CCRV <GO>
Global Energy Statistics: ENST <GO>
--Editors: Rob Verdonck, Stephen Voss
Ben Farey in London at +44 20 7673 2369 or
bfarey@bloomberg.net
To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or sev@bloomberg.net
