Natural Gas Growth to Slow as European Demand Falters, IEA Says

Natural gas demand for power generation will slow in the next five years as European consumption falters and Africa and the Middle East struggle to boost production, according to the International Energy Agency.

Global consumption of the fuel will rise by 2.4 percent a year until 2018, down from last year’s forecast for 2.7 percent annual growth, the Paris-based agency said in its medium-term gas market report published today.

Europe’s gas use fell 1.6 percent last year amid the region’s second recession since 2008 and a 16 percent drop in carbon prices that encouraged power production from coal instead of cleaner-burning gas. Exporters from Egypt to Indonesia have started importing the fuel as domestic production fails to keep pace with local demand growth.

“European demand and Middle Eastern production are indicative of the obstacles that gas has to overcome as it expands its role in the global energy system,” Maria van der Hoeven, executive director of the IEA, said in the report.

World gas demand will rise to 3,962 billion cubic meters in 2018 from 3,427 billion in 2012, according to the IEA. The increase is equivalent to current Middle Eastern gas output, or 1.7 times global LNG trade, the adviser to 28 nations said in its report.

European natural gas consumption will fall to 506 billion cubic meters next year from 513 billion in 2012, before rising to 525 billion in 2018. Chinese use will almost double to 295 billion cubic meters in 2018 after 13 percent growth last year, and will account for about 30 percent of the increase in global demand, the IEA said.

U.S. Shale

The use of natural gas as a fuel in road transport will rise to 2.5 percent of total demand in 2018 from 1.2 percent in 2012, spurred by China’s need for less-polluting fuel and the conversion in the U.S. of long-haul heavy trucks to LNG from diesel, according to the IEA.

Growth of unconventional shale gas in the U.S. will “dwarf” unconventional developments outside North America, the IEA said. U.S. shale will provide more than a fifth of the global increase in gas production to 2018 as the nation’s output rises 17 percent from 2012 levels to 797 billion cubic meters, the IEA said.

World gas output will climb 15 percent in the period to 3,959 billion cubic meters, according to the report. Australian production will rise 156 percent to 141 billion cubic meters.

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