Natural gas will continue to increase its share of the global energy mix, growing at 2.4% per year between now and 2018, the IEA said in its Medium-Term Gas Market Report (MTGMR). However, this projected growth rate is lower than the IEA’s forecast last year of 2.7%, due to persistent demand weakness in Europe as well as difficulties in upstream production growth in the Middle East and Africa. At the same time, the report sees gas emerging as a significant transportation fuel: Thanks to abundant shale gas in the United States and amid more stringent environmental policies in China, gas is expected to do more to slow oil demand growth than electric vehicles and biofuels combined.
While the report foresees the share of gas in the global primary energy mix rising and while total gas demand is expected to rise to nearly 4,000 bcm in 2018 from 3,427 bcm in 2012, gas faces challenges in all the major geographic regions. In the United States, in the absence of policy constraints on coal-fired plants, recovering gas prices will prompt coal to regain some of its share of the power market, putting US greenhouse-gas emissions from the power sector back on a growing track. Europe sees only a weak and partial recovery due to the Eurozone crisis and low carbon prices. Gas exports from the Middle East decline amid runaway domestic demand growth – especially in the power sector.