BAKU, Azerbaijan, Nov.19
By Leman Zeynalova – Trend:
Low gas prices are expected to incentivize demand growth in the medium term, and a slower capacity build-up in the LNG market could contribute to market tightening towards the mid-2020s, Trend reports with reference to Norwegian Equinor’s outlook.
Producer behavior and timing of the next LNG investment cycle will be key drivers for the market, reads the report.
“Our scenario-based assessment of long-term gas developments encompasses drivers like affordability, fuel substitution, geopolitical tensions and lack of market integration. In addition, the energy transition will eventually challenge the role of natural gas in the global fuel mix. The outcome space after 2030 is large, spanning from around 3250 to around 4800 Bern in 2050. The strategic implications for resource owners are considerable.
“Reform sees gas growing at an annual growth rate of 0.5 percent 2025-50. Asia makes up 63 percent of growth, providing a pull signal on supply in all geographies, including LNG value chains. LNG supply reaches 980 Bern in 2040. In Rivalry, policies shift away from emission reductions and energy efficiency towards energy supply control, favoring local resources over imported gas. LNG projects are discouraged due to increased political risk. Gas producing regions such as the US, Russia and the Middle East increase demand, whereas Europe and Asia reduce fuel imports. Overall, gas demand is slightly reduced vs Reform.
“Following the approach of international cooperation in order to deliver on global sustainability targets. Rebalance includes use of new technology, energy efficiency and more even distribution of income. Increased economic growth and hence energy use in emerging regions, relative to industrialized regions, implies growing gas demand vs Reform in India, Africa and South East Asia, whereas mature markets reduce their gas reliance. China is still the main growth engine in this scenario, but a weaker GDP outlook and the shift from the energy intensive industries to service industries dampen gas growth vs Reform. As a fossil fuel, gas is exposed in the long term, as the renewables share in the power sector increases. It does however play a vital role in the rapid phase out of coal in the power sector and complements intermittent renewable supply.
“Intermittent generation and demand variability mean there will be a significant need for flexibility in the electricity system. CCUS and "blue" hydrogen production are means to address this issue in a low-carbon context and will support gas demand. However, competitiveness of unabated natural gas declines as end users face increasing costs from emitting C02. Resource owners, partners and not least governments must develop strategies and incentives to promote clean energy value chains. Considerable work and efforts remain to realize such new projects and investments,” said the company.
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