Global gas demand growth set to slow

Growth for gas demand will primarily arise from alternative markets such as those in Asia, the Middle East and Africa. (Image source: Adobe Stock)

According to the International Energy Agency’s (IEA) medium-term forecast, growth in global demand for natural gas is set to decelerate following a peak in mature markets

Natural gas demand has enjoyed a decade of unprecedented expansion with an average global growth of 2.5% a year between 2017 and 2021. However, according to IEA’s Gas 2023 Medium-Term Market Report, growth is set to stutter, dropping to an average of 1.6% a year between 2022 and 2026

The major driving factor for this is the mature markets in Asia Pacific, Europe and North America peaking in 2021, with the IEA forecasting gas demand to decline in these markets by 1% annually through to 2026. This is primarily due to the rise in renewables and improved energy efficiency. 

Growth for gas demand, therefore, will primarily arise from alternative markets such as those in Asia, the Middle East and Africa. The IEA predicts that China alone will account for almost half of the total growth in global gas demand between 2022 and 2026 for instance. 

Keisuke Sadamori, IEA director of energy markets and security, commented, “After their heyday between 2011 and 2021, the world’s gas markets have entered a new and more uncertain period that is likely to be characterised by slower growth and higher volatility – and could lead to a peak in global demand by the end of this decade. Different trends are playing out across different regions, with demand declining in mature markets but continuing to grow in emerging and developing economies. 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.”

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% 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.

The IEA report also provides an outlook for the role of low-emissions gases across key regions, indicating the supply of these gases is expected to more than double through to 2026. Europe and North America are set to drive this expansion and contribute almost 70% of the overall growth. 

The development of low-emissions gases in these markets benefits from a wide range of policies, increasingly sophisticated subsidy schemes and well-developed, interconnected gas networks. Nevertheless, further efforts will be required to reach the targets set both for biomethane and low-emissions hydrogen, according to the report.