Global gas demand is on course to grow by an average on 1.6 percent a year between 2022 and 2026, down from an average of 2.5 percent a year between 2017 and 2021, says the Gas 2023 Medium-Term Market Report from IEA.
Gas demand growth is projected to slow by almost a third, from an average rate of 2.5 percent per year during 2017-2021 to 1.6 percent in the 2022-2026 period.
Natural gas consumption is expected to remain broadly flat in 2023 as demand gains in Asia Pacific and the Middle East are almost entirely offset by the drops in demand in Europe, Central America and South America.
Global gas demand is expected to return to moderate growth in 2024, primarily driven by Asia Pacific and the Middle East. Demand growth is expected to be more robust in 2025-26, supported by higher LNG liquefaction capacity additions than the historical average.
The combined gas consumption of mature markets in Asia Pacific, Europe and North America peaked in 2021 and is expected to decline at a rate of 1 percent per year between 2022 and 2026. In Europe, the gas crisis reinforced the structural drivers accelerating the decline in gas demand over the medium term.
An accelerated deployment of renewables, higher energy efficiency Australia, Japan, Korea, New Zealand and Singapore. standards and growing electrification in areas such as space heating are set to weigh on gas consumption. In mature Asia Pacific markets, improving nuclear availability together with the continued expansion of renewables is expected to reduce the call on gas-fired power plants and drive down overall gas demand.
In North America, higher output from renewable energy is forecast to reduce gas usage in power generation, while improved energy efficiency standards and a gradual electrification of heating are set to shrink the role of gas in residential and commercial sectors.
Faster-growing Asia Pacific markets and gas-rich countries in Africa and the Middle East are set to drive growth in gas demand. China alone accounts for almost half of the increase in global gas demand over the forecast period, with the power sector, industrial production and city gas networks the major consumers.
Strong LNG supply at the end of the forecast period is set to ease market fundamentals and unlock some price sensitive demand in developing Asian markets that have the infrastructure in place.
In the Middle East, production growth in Iran, Israel and Saudi Arabia is expected to support the expansion of gas-intensive industries and higher gas burn in the power sector.
Africa’s gas demand growth is driven by its rapidly rising population, improving energy access and economic growth.
Eurasian natural gas demand trends towards stagnation, with the region’s gas demand standing 2 percent above its 2021 level by 2026. Overall gas demand from mature markets in Asia Pacific, Europe and North America peaked in 2021, and is forecast to decline by 1 percent annually through to 2026, according to the report.
An accelerated rollout of renewables and improved energy efficiency are among the key drivers behind the downward trend for natural gas in these markets.
For Europe, the loss of piped gas from Russia, following its invasion of Ukraine, pressed governments to seek alternative solutions to maintain energy security.
Decreasing demand in mature markets across the world – a collection of countries that represents almost half of global gas consumption – means that growth will be highly concentrated in fast-growing Asian markets as well as some gas-rich economies in the Middle East and Africa.
China alone is expected to account for almost half of the total growth in global gas demand between 2022 and 2026, drawing on the fuel to serve its industrial production, power sector and urban areas. An increase in the amount of new liquefied natural gas (LNG) capacity coming online is expected to affect market dynamics in 2025 and 2026 by easing some of the tightness and unlocking price sensitive demand.
Global LNG capacity is expected to expand by 25 percent between 2022 and 2026, with the United States consolidating its position as the world’s largest LNG exporter through the construction of new liquefaction plants.
Growth in LNG supply signals a shift to a more globalised gas marketplace, which will improve resiliency and the ability of suppliers and consumers to respond to supply and demand shocks.
“We expect a substantial increase in new LNG capacity coming online in the years ahead, which should ease some of the tightness and security of supply concerns that markets have been experiencing since Russia started withholding supplies in 2021,” said Keisuke Sadamori, IEA Director of Energy Markets and Security.