IEA forecasts doubling of Chinese gas demand by 2017

According to the Medium-Term Gas Market Report 2012 issued by the International Energy Agency (IEA), global gas demand should increase by an average 2.7%/year over the next five years (from 2.4%/year initially predicted).



This strong increase should come from dynamic demand in China: the country should double consumption by 2017, becoming the third-largest gas importer behind Europe and Asia Oceania. China should account for 25% of the new gas demand, followed by Middle East (25%) and North America (20%). Japanese imports should also increase, depending on the country's nuclear policies.



On the supply side, the report identifies other future sources of supply, with most incremental gas production coming from the Former Soviet Union (FSU) and North America. Further growth in unconventional gas will come mostly from shale gas in North America plus tight gas and coalbed methane (CBM) production elsewhere. Shale gas developments in other regions are likely to be concentrated in China and Poland. North America is expected to become a net LNG exporter by 2017.



Rising offer from unconventional gas sources should lower gas prices. In the United States, gas would be more competitive and should weigh as much as coal in power generation. Global gas trade will expand by 35%, driven by LNG and pipeline gas exports from the FSU region; most of this expansion occurs from 2015 onwards, following a period of further tightening of global gas markets. Natural gas is the most important commodity with no global market price yet. Divergence among regional gas prices will decline but remain a feature of global gas markets. The emergence of a spot price in Asia would aid regional producers and buyers.