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    Good Outlook for Gas but Challenges Ahead: Report


Gas demand is seeing strong growth thanks to ample supply and greater liquidity, translating into lower prices for consumers.

by: Joseph Murphy

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Good Outlook for Gas but Challenges Ahead: Report

Italian gas firm Snam, International Gas Union (IGU) and the Boston Consulting Group (BCG) published their annual Global Gas Report on October 16, examining the key trends of the global gas market.

Demand for gas rose by 5% last year, according to the report, with this strong growth driven by ample supply and greater liquidity. The lowest prices in years at key gas hubs made more gas more affordable to consumers, snatching market share away from coal. The biggest growth in consumption last year was seen in the US and China. Meanwhile global gas trade increased by 4% during the year.

The report sees gas continuing on a positive trajectory, with the market expanding by 2% on average each year until 2040 – the same rate of growth seen in the last five years, raising its share of the global energy mix to 25%. This trend will be supported by growing supply, increasingly competitive pricing and gas’ environmental benefits compared with other fossil fuels.

Cost competitiveness will be vital for gas to deliver on its full potential, the report concludes. There are also challenges ahead, such as the need for sustained investment in infrastructure to expand access to low-cost gas reserves, particularly in emerging economies. Besides cost and availability, the gas sector’s prospects will also be shaped by efforts to improve its environmental impact. Continued action is needed to cut methane emissions and ensure data availability and transparency, the report states. Government policies are also needed to spur development of low carbon gas technologies, such as renewables, hydrogen and carbon capture, utilisation and storage.

A special section of the report looks at the future impact of these low-carbon technologies on the European energy system, highlighting the continued importance of infrastructure to realise gas’ benefits.

“Natural gas is currently in a sweet spot and has exciting prospects in light of the potential for replacing coal in electricity generation and of the gradual growth of renewable gases such as hydrogen and biomethane,” Snam CEO Marco Alvera said in a statement. “In fact, natural gas and even more the growing potential of renewable gases are capable of reducing both CO2 emissions and pollution, enabling the energy transition to take place at affordable prices for all consumers.”

IGU president Joe Kang commented that he was “thrilled to see the two prominent trends of natural gas prices – as they are reaching lower levels and becoming more globalised.”

“I look forward to seeing the great benefits for a sustainable energy future, as gas is becoming more affordable in more markets,” he said.

BCG managing director Alan Thomson added: “The report highlights the critical role of the natural gas industry in helping to meet the Paris climate goal, through urgently reducing methane emissions, enabling a rapid transition away from coal, and scaling up new low carbon technologies.”

A copy of the Global Gas Report 2019 can be found here.