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This articles was published in Pipeline Magazine (December 2005)
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Asia to spur growth in global gas demand
China, India to lead growth but remain major oil consumers

MIDDLE Eastern and other major producers should be thankful to China, India and other emerging Asian economies for spurring growth for their gas.

Currently, the two most populous nations in earth, accounting for more than a third of the world’s human race, are negligible gas consumers in global standards. But this picture will be turned upside down in the coming two decades.

While consumption of natural gas is projected to grow by one to three per cent in most industrial countries and other consumers, demand is expected to race between five and eight per cent in China and India. US estimates showed gas would be the fastest growing source of energy in most countries in the long term and the highest growth rates would be recorded in China, India and other Asian consumers.

“Natural gas is the fastest growing primary energy source. Consumption of natural gas is projected to increase by nearly 70 per cent between 2002 and 2025, with the most robust growth in demand expected among the emerging economies (China, India, South Korea and other Asian markets),” the Energy Information Administration (EIA) said.

Its figures showed that worldwide, gas demand would grow by around 2.3 per cent annually between 2002 and 2025 compared with a projected annual growth of 1.9 per cent for oil consumption and 2.0 per cent for coal.

It showed consumption of natural gas would increase from around 92 trillion cubic feet to 156 trillion cubic feet during that period, boosting its share of the total energy consumption from 23 to 25 per cent despite growth in other energy sources.

It said the electric power sector accounts for almost half of the total incremental growth in worldwide natural gas demand over the forecast period.

“On a regional basis, the largest increases in natural gas consumption worldwide are projected for the transitional economies of Eastern Europe and the former Soviet Union and for emerging Asia. Natural gas use in Eastern Europe and Former Soviet Union expands by 63 per cent over the projection period and in emerging Asia, gas use is expected to nearly triple from 2002 to 2025,” EIA said in its annual report for 2005.

“In the mature market economies (industrial countries), where natural gas markets are more established, consumption of natural gas is projected to increase by a more modest annual average of 1.6 per cent during that period, with the largest incremental growth in the mature market economies projected for North America—at 11 trillion cubic feet.”

In another section of the 185-page report, it said China and India would also spearhead growth in oil consumption despite their switch to gas in electricity and other sectors.

China, which is recording one of the highest economic growth rates in the world, has been attributed for the recent surge in crude demand and consequently high oil prices. Although demand is projected to slow down in the coming few years, the South East Asian countries is projected to record the highest growth rates in oil demand until 2025.
Following are excerpts of the EIA report on gas consumption in three Asian countries—China, India, South Korea.

China
Overall natural gas consumption in China is projected to grow at an average annual rate of 7.8 per cent from 1.2 trillion cubic feet in 2002 to 6.5 trillion cubic feet in 2025. Only nuclear power generation is projected to grow more rapidly, at a 9.9-per cent average annual rate over the forecast period.

India
Overall, India’s gas consumption is projected to grow at an average annual rate of 5.1 per cent, from 0.9 trillion cubic feet in 2002 to 2.8 trillion cubic feet in 2025. The electric power sector is projected to account for 71 per cent of the total incremental growth in India’s natural gas demand during that period.

South Korea
Total natural gas consumption is projected to grow at an average annual rate of 3.7 per cent from 2002 to 2025. On a Btu basis, the share of total industrial consumption attributable to natural gas is projected to grow from just five per cent in 2002 to almost 16 per cent in 2025 and the share of attributable to oil is expected to shrink from 58 per cent to just under 50 per cent during the forecast period.