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Global demand for gas could rise rapidly in the coming decades, with Australia and North America becoming increasingly important players; both using unconventional sources as a feedstock for LNG production.
The growth in LNG is having a significant impact on the gas market globally, with prices falling, particularly as a result of the US gas glut. Global gas prices dropped to ten-year lows in January 2012. However, while supply is increasing, so too is demand. This is particularly true in Japan, where nuclear energy has taken a blow in the wake of the Fukushima disaster. With ever-present uncertainties surrounding oil supplies in the Middle East, natural gas is becoming an ever more appealing energy source to many governments.
In June 2011, a report from the IEA posed the question of whether we are now entering a new golden age of gas, concluding that indeed we may very well be, with China the central driver of global demand. As in the past, electricity generation is expected to drive the growth in LNG demand over the coming decades. However, questions remain over whether the gas industry will be able to keep up with such rapidly increasing demand.
On the supply side, Qatar currently reigns supreme, becoming the world’s largest LNG exporter in 2006, and supplying around a quarter of the world total. However, Nigeria and particularly Australia are now challenging Qatar’s supremacy. Australia is today being tipped as a future major exporter of gas in the form of LNG. There is believed to be great scope for the development of unconventional gas in Queensland, and a number of projects are already under construction. John Gass, president of the global gas business at Chevron, believes Australia is “on the cusp of some truly dynamic growth decades for natural gas.”
In North America, there is an abundance of natural gas and the region has the potential to transform into a major exporter of gas within a very short space of time.
Increased electricity needs in China are pushing demand in that country and the Chinese government announced plans to significantly increase the use of gas in the nation’s energy mix in its latest five-year plan in March 2011. The major Chinese gas companies now see LNG as playing a key role as demand increases and it is widely believed that China will very soon become the world’s largest LNG importer.
Meanwhile, in Europe, demand uncertainty with regard to gas could reduce the continent’s attractiveness as a potential market for LNG producers and some are predicting that Europe may struggle to source the LNG it needs.
For more information on projections of the future of LNG please click here.