HIGH liquefied natural gas prices are threatening to stymie demand in Asia, opening up a potential window of opportunity for coal supplies, the International Energy Agency (IEA) has predicted.
In its 2014 Medium-Term Gas Market Report released in June, the IEA said the golden age of natural gas that was firmly established in North America will expand to China over the next five years, underpinned by booming demand.
The projected near-doubling of Chinese gas demand through 2019 compensates for a slight slowdown in growth in many other areas of the world, the report said.
The annual report, which gives a detailed analysis and five-year projections of natural gas demand, supply and trade developments, sees global demand rising by 2.2 percent per year by the end of the forecast period, compared with the 2.4 percent rate projected in last year’s outlook.
LNG will meet most of the demand, with private-sector operators in Australia, Canada and the United States are taking the lead in the expansion of the LNG trade, which is expected to grow by 40% to reach 450bcm by 2019
Despite the projected growth in gas demand and production, IEA executive director Maria van der Hoeven said warning lights were flashing.
“High LNG prices are threatening to crimp demand as many countries are increasingly unwilling, or unable, to afford these supplies – and that could open the door to coal,” she said.
“Looking ahead, unless we see timely investment in new production and LNG facilities and the reversal of the recent cost inflation of LNG, only a very strong climate policy commitment could redirect Asia’s coal investment wave to gas.”
In China, where air quality concerns are prompting the government to adopt tough plans to reduce pollution, gas is emerging as a major part of the solution.
The power, industrial and transport sectors will drive overall Chinese gas demand to 315bcm in 2019, an increase of 90% over the forecast period, the report said. While China will remain a significant importer, half of its new gas demand will be met by domestic resources, most of them unconventional: Chinese production is set to grow by 65%, from 117bcm in 2013 to 193bcm in 2019.