London — Global gas demand is set to increase by 1.6% annually to 2023, to reachsome 4.1 trillion cu m, the International Energy Agency (IEA) saidTuesday, driven by surging consumption in the Asia-Pacific region, andparticularly China.
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In its latest annual gas report, the IEA said the pace of global demandgrowth would see 376 Bcm of consumption added by 2023, more than the 358Bcm addition in the previous six-year period.
"The picture is quite bright," the IEA's senior gas analyst,Jean-Baptiste Dubreuil, said during a webinar.
China -- the IEA argues -- is the defining story in global gas marketgrowth in the coming years.
"China, whose market grew by an astonishing 15% in 2017 with a strongcoal-to-gas switching program in the residential and industrial sectors,is set to continue to lead the trend with an expected average annualgrowth rate of 8% for the next five years," the agency said.
"Driven by continuous economic growth and strong policy support to curbair pollution, China accounts for 37% of the global increase in gasconsumption between 2017 and 2023, more than any other country."
It adds that because Chinese gas output is set to lag demand growth bysome margin, China will becomes the world's largest gas importer by 2019and will be importing 171 Bcm/year of gas by 2023.
Other emerging Asian economies such as India, Bangladesh and Pakistan arealso expected to see sustained demand growth during the forecast period.
"By contrast, consumption in the Asia-Pacific region's more maturemarkets decreases over the period, with slight growth in Australia andSouth Korea more than offset by the decrease in Japanese demand," itsaid.
The IEA also said that the global gas market was shifting in terms ofwhich sectors drive growth, with industry set to take the lead from powergeneration as the main driver of global demand growth. "Emerging markets, primarily in Asia, account for the bulk of thisincrease with uses as a fuel for industrial processes as well as forfeedstock for chemicals and fertilizers," it said.
Industrial gas demand also grows in major producing regions, such asNorth America and the Middle East, to support expansion of theirpetrochemicals sectors, it said.
SUPPLY GROWTH, LNG MARKET
On the supply side, global supply is expected to match demand, hitting4.1 Tcm by 2023.
The US is set to keep its leading role in supply and export growth, withthe production outlook given a boost by the gas associated with tight oiloutput.
"Additional US production accounts for almost 45% of the global growth,"the IEA said, with much of the increase targeted for exports.
Most of the increase in gas output from other major producing areas, suchas the Middle East, China and Egypt, is dedicated to domestic markets inthe near term.
In LNG, after a period of ample supply, the global market could start totighten by 2023, the IEA said.
New projects are set to add some 140 Bcm of liquefaction capacity between2018 and 2023, increasing global capacity by almost 30%.
More than half of that expansion -- over 80 Bcm -- takes place in the US,with Australia and Russia also providing significant contributions with30 Bcm and 15 Bcm, respectively.
But, the agency said, a lack of projects post-2020 could lead to a markettightening.
"Without new investment, the average utilization rate of liquefaction islikely to return to its pre-2017 level by 2023," it warned.
"Owing to the long lead time of such projects, investment decisions needto be taken in the next few years to ensure adequate supply beyond 2023."
-- Stuart Elliott, Stuart.Elliott@spglobal.com
-- Edited by Irene Tang, firstname.lastname@example.org