GECF eyes 46% gas demand rise by 2040
The Gas Exporting Countries Forum (GECF) released the 2018 edition of its Global Gas Outlook 2040 December 7, saying that natural gas demand in the global energy mix is expected to rise from the current proportion of 22% to 26% by 2040. That implies a 46% increase in demand, from 3,709 trillion m³ in 2017 to 5.427 trillion m³ in 2040.
Asia Pacific, North America, the Middle East and Africa will lead this growth. "Gas demand in Africa will grow most rapidly (3.1%/yr) albeit from a very low base. North America and Asia Pacific will account for 52% of global gas consumption in 2040. The US will increase consumption by 54% to 1.173 trillion m³/yr, while Chinese demand will grew 49% to 701bn m³/yr by 2040," GECF said.
On the supply side, the US, Russia, China and Iran are the largest contributors to this expansion, accounting for 24.8%, 12.4%, 12.4%, and 10.5% respectively, of total change. GECF members will increase their production by one third, to about 2.25 trillion m³ by 2040, the GECF said.
Changing energy mix
GECF forecasts that the primary energy demand is projected to rise by 1%/yr and "non-fossil fuels are expected to develop at a rate of 2.1%/yr, while fossil fuels will grow by an average of 0.7%/yr".
Oil will slip from 32% to 29% of the global mix by 2040, while coal will plummet by almost a quarter, from 27% to 21%, owing to environmental concerns, with the Asia Pacific region accounting for the bulk of demand. Renewable energy demand – excluding hydro and biomass – is forecast to soar by 6.7%/yr, to reach 6% of the total energy mix by 2040. Natural gas will be the fastest growing fossil fuel, mainly thanks to policy drivers concerning air quality, and will displace other sources of energy across a range of sectors. Demand is expected to increase by 1.7%/yr, with gas’s share of the energy mix rising from 22% to 26% by 2040.
Prices to rise
GECF says that, in the longer-term, increased capital cost of production, gas demand pressure from energy transition and power mix substitution, as well as the lack of new transportation projects coming after 2030 are expected to drive prices up. "The important exception will be Latin America, where the growth in indigenous natural gas production and short distance for US LNG shipments will keep prices at a slight premium to Henry Hub. For the European market, the price is expected to edge up significantly following the new avenues for gas-to-gas competition with both LNG and pipeline supplies to Asia, as well as an increase in the carbon price and planned coal and nuclear capacity phase-outs."
(GGM = Global Gas Model)