Chinese gas demand to slow by 2024, says IEA

Demand growth is set to come from South Asian countries such as Bangladesh, Pakistan and India

China has been mulling retaliatory tariffs, which could include increasing tax on US exports of LNG to the country. Bloomberg

Demand for natural gas, particularly from big consumers such as China, will cool over the next five years because of slower economic growth, according to the IEA.

China, the world’s largest importer of natural gas, will see its demand growth slow to 8 per cent in 2024, from 18 per cent in 2018, according to the Gas 2019 report by the agency.

Global demand for gas is expected to rise by more than 10 per cent over the next five years, reaching above 4.3 trillion cubic metres in 2024, the Paris-headquartered agency said in the report.  “Natural gas helped to reduce air pollution and limit the rise in energy-related CO2 [carbon dioxide] emissions by displacing coal and oil in power generation, heating and industrial uses,” said IEA executive director Fatih Birol.

“Natural gas can contribute to a cleaner global energy system. But it faces its own challenges, including remaining price competitive in emerging markets and reducing methane emissions along the natural gas supply chain,” he added.

China, which displaced Japan as the top importer for the cleaner fuel, is currently in a trade war with the US, the world’s biggest producer of gas. Beijing has plans to raise tariffs on liquefied natural gas (LNG) from the US to around 25 per cent this year as the two countries face off against each other. The stand-off has already rattled the oil markets, with the price of Brent plunging to a 12-week low as the US continues to impose protectionist measures.

The IEA noted in its latest report however, that China’s demand for natural gas, which it views as a cleaner, transitional fuel to combat rising air pollution in its congested cities would still account for a significant 40 per cent of global demand by 2024.

Demand for gas however, will be driven by new players in Asia such as Bangladesh, India and Pakistan, which will look to import more of the fuel to meet the demand of growing populations.

Bangladesh is looking to develop its first onshore LNG import terminal as it looks to diversify its energy mix for a population of 160 million.

Pakistan is scouting for long-term LNG deals and could see its demand for the fuel treble over the next three to five years, according to the government’s own estimates.

State-owned Pakistan LNG is looking to buy up to 240 cargoes over the next decade, with an average of two shipments of 140,000 cubic metres per month.

India, the largest economy in South Asia, is actively looking to substitute its dependence on polluting coal with natural gas as it negotiates a transition to renewable energy.

Industrial use of natural gas, both as fuel and feedstock, is expected to expand at an average of 3 per cent annually and could account for nearly half of the rise in global consumption by 2024, the IEA said.

Investment in planned LNG schemes have rebounded, added the agency, with a number of projects likely to reach final investment decisions in 2019.