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Global gas demand to rise 50% by 2050, gas export group says

Global natural gas demand is forecast to grow by 50% to 5.92 trillion cubic meters by 2050 from 2019 levels, the Gas Exporting Countries Forum said Feb. 24 at the launch of its latest "Global Gas Outlook."

The share of gas in total energy consumption would rise to 28% by 2050 from 23% currently, the only fossil fuel to see its market share increase, the forum's secretary general, Yury Sentyurin, said at the webcast launch of the outlook.

"I'd like to send a clear message that it's still too early to write off hydrocarbons," Sentyurin said. "They will remain the dominant source in the global energy mix for the foreseeable future."

The Gas Exporting Countries Forum, or GECF, with members that include gas heavyweights Russia, Qatar and Iran, came into being in 2001 and holds about 71% of the world's proven gas reserves.

The GECF's forecast for gas demand growth is broadly in line with forecasts from other organizations on an annualized basis. The International Energy Agency sees global gas consumption reaching 5.22 trillion cubic meters by 2040. S&P Global Platts Analytics forecast global gas demand at 5.29 trillion cubic meters in the same time frame.

Sentyurin said global gas demand growth would mainly be seen in the Asia-Pacific, North American and Middle Eastern markets, which together will account for more than 75% of growth. Demand in Asia-Pacific was forecast to almost double by 2050, with North American demand set to rise by 35% and Middle Eastern consumption to increase by 53%.

Europe would continue to be an attractive market, despite a 10% decline in forecast gas demand by 2050 from 2019 levels, Sentyurin said.

Sentyurin said the outlook estimated that investments in the industry of at least $10 trillion would be required by 2050 to "secure the interests of consumers and producers."

The secretary general slammed sanctions on GECF member countries, a likely reference to international sanctions on Iran and Russia. "These negatively impact the development and adequate investments in gas projects," Sentyurin said.

The GECF continues to believe that oil indexation remains the best way to price gas. "GECF member countries see oil-indexed, long-term gas contracts as the preferred way to ensure the stability of prices and to protect our consumers from shortfalls of supply or price spikes," Sentyurin said.

Pointing to volatility in global gas pricing this winter, with record-high spot LNG prices in Northeast Asia and high gas prices in the U.S. due to freezing temperatures, Sentyurin said the long-term contract model brought more stability. He said the "unanimous" position of the GECF member states was that oil indexation was the still the "optimum choice for buyers and sellers of gas as has been proven again this winter."

Much of Europe has abandoned oil indexation in gas contracts, preferring to contract volumes instead on a gas-on-gas basis. However, Russia and Qatar in particular have said they still want to use oil indexation in contracts.

Over the past decade, there has been speculation that the GECF could morph into a "Gas OPEC," with the power to manage markets through supply intervention. The group has so far ruled out coordinated market management, instead reaffirming its commitment to promoting gas. Russian Deputy Prime Minister Alexander Novak, addressing the GECF webinar, said the forum had a key role in promoting gas market stability.

"In order to improve the long-term sustainability and the security of the gas market, we require collective efforts of the major gas producing and exporting countries," Novak said.

"The GECF is a unique platform to contribute significantly to developing mechanisms for ensuring the seamless functioning of gas markets," he said.

Novak reiterated Russia's ambition to reach an LNG production capacity of 120 million to 140 million tonnes per year by 2035. Russia is the biggest exporter of gas among the GECF members, followed by Qatar, Nigeria and Algeria. The 11 full GECF member countries are Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Qatar, Russia, Trinidad & Tobago and Venezuela. There are eight GECF observer countries: Angola, Azerbaijan, Iraq, Kazakhstan, Malaysia, Norway, Peru and the United Arab Emirates.

Stuart Elliott is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.