The International Energy Agency (IEA) has released its latest Medium-Term Gas Market Report where it noted a shrinking global demand for the cleaner liquefied natural gas (LNG). Demand for the fuel will reach only a growth of two percent annually in the years to 2020, from the previous 2.3 percent growth forecast made in 2014.
The drop is attributed to the weaker appetite from Asia. The region has shifted to oil and gas to meet requirements, spurred by the prevailing cheaper prices in the market. Oil currently sells US$58 a barrel while metallurgical coal is at US$119 per ton.
Asia, it seems, when faced with cheap coal and lowering costs of renewables, will still choose them over LNG. “Indeed, the belief that Asia will take whatever quantity of gas at whatever price is no longer a given,” IEA Executive Director Maria van der Hoeven said.
There will still be demand for the cleaner LNG. But IEA said it can’t gauge a strong and stable long term outlook for it.
Demand “has become more uncertain, especially in Asia … the experience of the past two years has opened the gas industry’s eyes to a harsh reality: in a world of very cheap coal and falling costs for renewables, it was difficult for gas to compete.”
Asian LNG consumption in 2014, according to IEA, was “unexpectedly soft.” In China, for instance, from 14 percent, its demand for LNG dropped to 8-9 percent.
Meanwhile, global LNG demand will grow to 3.93 trillion cubic meters (139 trillion cubic feet) from the 3.5 trillion cubic meters (124 trillion cubic feet) a year ago. Australia and the U.S. will be the major suppliers on the market in 2020.