Global demand for natural gas is set to keep growing over the next five years, driven by strong consumption in fast-growing Asian economies and supported by the continued development of the international gas trade, the International Energy Agency (IEA) says.

Demand for natural gas grew by 4.6% in 2018, its fastest yearly growth since 2010, the IEA’s ‘Gas 2019’ report shows.

Gas accounted for almost half the increase in primary energy consumption worldwide.

Demand is expected to rise by more than 10% over the next five years, reaching more than 4.3-trillion cubic metres (tcm) in 2024.

“Natural gas helped to reduce air pollution and limit the rise in energy-related carbon dioxide emissions by displacing coal and oil in power generation, heating and industrial uses,” says IEA executive director Dr 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,” Birol adds.

China is expected to account for more than 40% of global gas demand growth to 2024, propelled by the Chinese government’s goal of improving air quality by shifting away from coal.

Chinese natural gas consumption grew by 18% in 2018 but is expected to slow to an average yearly rate of 8% to 2024 as a result of slower economic growth.

The IEA also forecasts strong growth in gas consumption in other Asian countries, particularly in South Asia. In Bangladesh, India and Pakistan, the industrial sector is the main contributor to growth, especially for fertilisers to meet the needs of growing populations.

Industrial use of natural gas, both as a fuel and a feedstock, is set to expand at an average yearly rate of 3% and account for almost half of the rise in global consumption to 2024.

Power generation remains the largest consumer of natural gas, despite slower growth owing to strong competition from renewables and coal.

The ‘Gas 2019’ report also focuses on the role of liquefied natural gas (LNG) at sea, which is set to emerge as a fast-growing alternative fuel because of stricter rules on sulphur content that will take effect in January 2020.

The IEA notes that supplies to meet growing global demand for natural gas will come from both new domestic production in fast-growing economies but also increasingly from major exporting countries, led by the development of abundant shale gas resources in the US.

The agency says the strong growth in LNG export capacity will enable international trade to play a growing role in the development of natural gas markets as they move towards greater globalisation.

Investment in LNG projects have rebounded in 2018 after several years of decline, and the large number of projects for which final investment decisions are to be made this year is likely to further support trade and market expansion.

However, more investment will be needed in the future, the IEA stresses.

“The recent convergence in market prices in major regions gives an indication of the increasing globalisation of the natural gas trade. Establishing market-driven pricing mechanisms in fast-growing economies remains a challenge however.

“Recent reforms in major markets are sending encouraging signals, but more will be required to ensure the sustainable market-driven development of natural gas in these economies.”