Global Gas Demand Grew Less Than Oil Demand in 2013, Says Cedigaz

Global gas demand rose slower than oil demand in 2013, confirming the difficulties the industry is going through. At the same time, gas has been the only fossil fuel to record lower growth in 2013 than in 2012.  

Those are two highlights of a new report released on Thursday by Cedigaz, which also advocates a significant increase in CO2 prices in Europe.  

‘In 2013, growth in worldwide gas demand decelerated, up by only 1% versus 2.4% in 2012. This is less than the 3% growth achieved by coal and, most remarkably, less than that of oil (1.4%)’ reads the report. 

In the last decade, gas’ average growth was around 2.8% per year. 

‘This disappointing performance is partly due to supply side issues, including acute gas shortages in several gas producing countries. Many of the latter, e.g. Egypt, India and countries in the Middle East, have seen low, regulated gas prices stimulate gas demand while discouraging the investments needed to boost production.’ 

Cedigaz called emerging economies to carry out a reform of their regulated gas prices. At the same time, it asked some form of intervention.

‘As seen in Europe, the double whammy of cheap coal and an increasing share of renewable power seriously undermines the business model of gas-fired power plants. Left solely to market forces, gas cannot compete with coal for base load power and its role is limited to meeting peak load demand. However, in mature electricity markets presenting little, if any, growth in demand, the introduction of a growing share of renewable power puts pressure on wholesale prices and displaces gas during peak hours when solar power is at its maximum. In this context, gas cannot make a significant contribution to electricity generation without a significant upswing in CO2 prices.’

According to the Paris-based organisation, gas will not displace coal without policy incentives. This counts for Europe, but also for emerging economies.