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International Energy Agency cuts global natural gas demand growth forecast



London: Global natural gas demand will increase at a slower rate than previously expected through 2019 amid weaker economic growth and competition from coal and renewables, according to the International Energy Agency (IEA).

Gas use will climb by 2.2 per cent annually through 2019 from 2013 after last year posting the slowest growth among fossil fuels, the Paris-based International Energy Agency said yesterday in its medium-term gas market report.

Consumption will be driven by non-developed countries, which will see their market share rise to 57 per cent of the total from parity in 2007.

"Slower economic growth, the ever-strong competition from both coal and renewable energies, together with high gas prices, are all slowing down the growth of natural gas across all sectors," the IEA said.

"The maturity of most markets, slower economic growth, and competition from renewable energies or coal" will damp demand from developed nations, it said.

Nations outside the 34-member Organisation for Economic Cooperation and Development (OECD) will provide 85 per cent of additional gas demand, led by China, where usage will rise 11 per cent a year to 2019, according to the report. Europe and the former Soviet Union will see zero growth in the period.

Global consumption gas increased 1.2 per cent last year to 3.49 trillion cubic metres (123 trillion cubic feet) as oil use grew 1.4 per cent, coal demand 3 to 4 per cent and renewable power generation more than 4 per cent, according to the IEA. Europe's push for green power and lower coal prices led to a loss of almost 40 billion cubic metres of gas in power generation alone over the past three years, the IEA said.

Power demand
"As the European case has shown, lower power demand, the stronger than expected growth of one type of energy and high gas prices can easily send gas demand in the doldrums for an extended period of time," it said.

Usage will reach 3.98 trillion cubic metres a year in 2019, a 2 per cent downward revision from last year's edition of the report, according to the IEA. Consumption will fall in the residential and commercial sectors, while demand from the power sector is set to increase, initially in North America and eventually in Europe, the International Energy Agency said.

"The current very low levels are starting to test the limits of the whole power system, and the decommissioning of coal-fired plants in the UK will help the return of gas use in the power sector," the IEA said.

Road transport
While there will be some improvement from European power generation, gas won't become the preferred fuel in the sector as renewables are expected to climb by about 260 terawatt-hours in OECD Europe, according to estimates to be released in the medium-term renewable energy market report in August, the IEA said yesterday. Gas-fired plants will generate 673 terawatt-hours by 2019.

"In particular, generation from wind continues to increase strongly," the IEA said. "Against this backdrop, renewable energies generate more additional power than the additional generation needed. If not for a declining nuclear output, combustible fuels (gas, coal and oil) would face an absolute decline, but the drop in nuclear actually compensates for the surplus of renewable sources."

Use of gas in road transport, especially in the United States and China, will double to 93 billion cubic metres in 2019 from 2013, accounting for 10 per cent of incremental global demand, the IEA said.
Gas will increase its share in the transport sector.

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