The International Energy Agency expects natural gas demand to decline slightly this year, with growth slowing further over the next three years.
In a gas market report issued today, Tuesday (July 5), the Energy Agency attributed its expectations of a contraction in global gas consumption to high prices, with fears of more gas supplies being cut off, following the Russian-Ukrainian war.
The International Energy Agency said that the current record high prices of gas prices have reduced demand and caused gas users to switch to coal and oil.
In its report, the details of which were seen by the Energy Research Unit, it added that the recent significant cuts in Russian gas flows to Europe raise the continent’s concerns about supplies before winter.
Gas reputation as a reliable source
The International Energy Agency has argued that the disruption caused by high prices and supply concerns as a result of Russia’s invasion of Ukraine is damaging natural gas’s reputation as a reliable and affordable source of energy.
She stressed that these events raise doubts about the expected role of natural gas in helping developing countries meet the increasing demand, and shift away from fuels that are harmful to the environment.
And the Russian invasion of Ukrainian territory – according to the Energy Agency – caused a crisis in energy supplies, and extensive repercussions on the global economy.
Limited growth in demand
In its report, the International Energy Agency expected a limited growth in the increase in demand for natural gas over the next three years, as it expected a total increase of about 140 billion cubic meters until 2025.
The latest forecast came in less than half of the increase of about 370 billion cubic meters over the past five years.
It was also less than the exceptional jump in gas demand over the past year, which approached the level of 175 billion cubic meters, according to the Energy Agency.
The agency attributed its forecast to weak economic activity, with a weak transition from coal and oil to gas.
Clean Energy
In its report, the International Energy Agency stressed the need for greater progress in the transition to clean energy.
She stressed that the acceleration of electricity generation from new and renewable energy, in addition to the deployment of energy efficiency systems, will ease pressure on energy prices, and help emerging markets sensitive to price movements to access gas supplies.
The gas market report quoted the Director of Energy Markets and Security at the International Energy Agency, Keisuki Sadamuri, as saying that the Russian invasion of Ukrainian lands seriously disrupted gas markets.
He added that the gas market is currently witnessing price hikes, with countries competing for LNG shipments.
Sadamori believes that implementing energy efficiency policies while accelerating the transition to clean energy is one of the most sustainable solutions to the energy crisis that the world is currently witnessing.
Gas Market Growth Engines
The IEA Gas Market Report sees the Asia Pacific region, in addition to the industrial sector, as major drivers of gas demand growth.
He expected that half of the projected growth in global gas demand, up to 2025, will come from the Asia-Pacific region.
The industry is also expected to represent 60% of the global demand for natural gas.
Moreover, the International Energy Agency warned that there is a possibility of a further decline in gas demand, due to higher prices and lower global economic growth.
Gas capacity and trade
The IEA also expected LNG liquefaction capacity additions to slow significantly; As a result of the decline in investments during the period of the decline in oil and gas prices during 2010, and delays in the delivery of new capacities due to the closures resulting from the repercussions of the Corona virus.
In the same context, the agency expected the growth of global trade in liquefied natural gas to slow at an annual average of less than 4% until 2025, which is much lower than the 7% rate recorded during the past five years.
Low Carbon Gas
The International Energy Agency believes that expanding towards low-carbon gas production and reducing methane would reduce pressure on gas supplies and reduce emissions.
The IEA expects bio-methane production to double through 2025, with the potential to rise further.
You also see that the continued development of low-carbon hydrogen will be a pull factor.
It warned that leaks from oil, gas and coal operations over the past year, if caught and used, would have provided an additional 180 billion cubic meters of gas to the market, which is more than the expected increase in consumption until 2025.
Source: XglobalMarkets
