Europe’s Declining Production to Boost Pipeline Imports from CIS
Europe’s declining gas production will lead to stronger inter-regional trade and a growth of pipeline gas imports from the Commonwealth of Independent States (Russia, Central Asia), wrote Cedigaz on Friday.
In its medium and long term natural gas outlook, the International Association for Natural Gas Information also said that the prospects of natural gas will strictly depend on economics, and on the regulatory framework. Meanwhile, in the long term, the international LNG market is said to tighten after 2020.
EXPANSION CANNOT BE TAKEN FOR GRANTED
The future expansion of natural gas should not be taken for granted. Increased competition with coal in the power sector will need to be addressed while maintaining a gas price at a level compatible with the development of large capital-intensive projects. Only by resolving this conundrum can natural gas fully live up to expectations’ Cedigaz remarked.
On a global scale, Asia-Oceania, the Middle East and the US are said to drive the supply side, while the demand growth is expected to mainly come from the Middle East.
‘Global primary energy demand will grow by 1.3% per year and natural gas demand by 1.8% per year to 2035. Natural gas will increase its share in the global energy mix from 21% in 2013 to near 24% in 2035’ the organisation wrote in its press release, adding that 75% of the projected growth will come from emerging markets.
In the OECD countries, natural gas could increase its share in the energy mix, due to an expansion in the power sector and, to a lesser extent, to the transportation sector.
LNG: STRONG COMPETITION BETWEEN EUROPE, AND ASIA
Speaking aon LNG, the organisation sees an increase in international spot LNG prices, and a simultaneous strong competition between Europe and Asia. According to Cedigaz, after an abundance of LNG supply in the short-term, the international LNG market is expected to tighten post-2020, reflecting major investment challenges.
‘LNG trade growth will be stronger than that of pipeline and its share of net inter-regional trade will increase from 46% in 2013 to 50% in 2035… Europe and Asia will be in strong competition to access LNG supply,’ the organisation wrote.