Gas Outlook Varies Greatly on Policy: Equinor
The long-term outlook for natural gas will greatly vary depending on policies regarding climate, as well as factors like affordability, fuel substitution, geopolitical tensions and the extent of market integration, Norway's Equinor said in an outlook report on November 17.
Depending on circumstances, gas demand could go as high as 4.8 trillion m3 or fall to 3.25 trillion m3 by 2050, according to the company, noting that the "strategic implications for resource owners are considerable." Equinor's most bearish outlook for demand is under its Rebalance scenario, which sees CO2 emissions never returning to the pre-pandemic level and a 15% reduction in absolute global energy demand by 2050.
Under its Reform scenario, where climate policies are tightened but not by enough to meet Paris Agreement goals, gas consumption will grow by 0.5% on average annually between 2025 and 2050, with Asia accounting for 63% of this rise. There will be a similar trajectory for gas demand under Equinor's Rivalry scenario, where "policies shift away from emission reductions and energy efficiency towards energy supply control, favouring local resources over imported gas."
"LNG projects are discouraged due to increased political risk. Gas producing regions such as the US, Russia and the Middle East increase demand, whereas Europe and Asia reduce fuel imports," the company continued. "Overall, gas demand is slightly reduced versus reform."
Under Rebalance, there will be increased gas demand in India, Africa and southeast Asia, but this will be more than offset by losses in mature markets. "As a fossil fuel, gas is exposed in the long term, as the renewables share in the power sector increases," Equinor explained. "It does however play a vital role in the rapid phase-out of coal in the power sector and complements intermittent renewable supply."
In this scenario, gas demand will find some support from blue hydrogen production and the deployment of carbon, capture and storage technologies. Equinor is involved in developing both technologies.