Natural gas is expected to be the fastest growing energy source until 2035, QNB said referring to the latest “BP energy outlook 2035”.
Until 2035 (from 2012), natural gas demand is expected to grow by an average 1.9% a year, outpacing all other energy sources.
This, according to QNB was likely to lead to higher natural gas prices, including that of LNG.
BP report forecasts that global energy consumption will grow by 41% up to to 2035 (from 2012). More than 95% of this demand growth is projected to come from emerging markets, including China and India, with the share of total of these countries accounting for about a quarter by
Meanwhile, energy use in the members of the Organisation of Economic Co-operation and Development (OECD) grouping all advanced economies is expected to grow slowly and begin to decline in the later years of the forecast period.
The OECD countries are becoming more fuel efficient by generating more income out of each unit of energy, resulting in a slowdown in their energy demand. The transition from industrial to service economies, increased global integration, the tradability of fuels across border and continued technological improvement, as well as the removal of fuel subsidies and policies geared toward fuel efficiency, all suggest that energy intensity will continue to decline.
To respond to higher global energy demand, the supply mix is evolving in favour of natural gas. Fossil fuels will continue to be dominant according to the report.
Oil, gas and coal are expected to converge on market shares of about 26-27% each by 2035, and non-fossil fuels, namely, nuclear, hydroelectricity and renewable, on a share of around 5-7% each.
Among fossil fuels, natural gas is growing fastest as it is increasingly being used as a “cleaner alternative” to coal for power generation as well as in other sectors. At the same time, the share of coal is forecast to diminish rapidly. It is currently the largest source of volume growth, but by 2025 coal is expected to add less volume than oil and only just ahead of hydroelectricity.
This will primarily reflect the shift away from coal-intensive electricity production in China in favour of natural gas powered electricity generation.
“There are still ample energy reserves available to the world economy,” QNB said. Owing to advanced engineering, large oil and gas reserves in Gulf Co-operation Council (GCC) countries as well as the oil shale revolution in North America are all contributing to these energy reserves. However, this raises the question of sustainability.
Increasing demand for energy in the developing world will lead to a significant rise in carbon emissions.
According to the BP report, global carbon dioxide emissions are projected to increase by 29%, with all the growth coming from emerging markets. However, there are grounds for optimism.
Carbon emissions fell in 2012 to 1995 levels in the US thanks to increasing energy efficiency and a switch in power-generation fuel from coal to natural gas.
Overall, natural gas is expected to be the fastest growing of the fossil fuels according to the report. Non-OECD countries, led by China and India, are expected to generate 78% of natural gas demand growth.
LNG exports are expected to grow more than twice as fast as gas consumption, at an average of 3.9% per year, and accounting for 26% of growth in global gas supply to 2035.
Furthermore, shale gas supplies are projected to meet 46% of the growth in gas demand and account for 21% of world gas and 68% of US gas production by 2035.
“Such large demand is likely to put upward pressure on natural gas prices, including LNG. Qatar is likely to benefit significantly from these developments,” QNB said.