China's Pollution Problem Pushes Country to Rival US in 'Golden Age of Natural Gas'

China's Pollution Problem Pushes Country to Rival US in 'Golden Age of Natural Gas'Reuters

China's gas demand is on course to nearly overtake the US in gas demand after the International Energy Agency revealed that 'Golden Age' of natural gas will expand over the next five years.

According to the Paris-based agency's 2014 Medium-Term Gas Market Report, global demand will rise by 2.2% annually until 2019, on the projected near-doubling of Chinese gas demand over the period.

The group cited air quality concerns for the country's appetite in rampant gas demand as it would help solve the problem of mass pollution.

The IEA said that the power, industrial and transport sectors will drive overall Chinese gas demand to 315 billion cubic metres (bcm) in 2019, an increase of 90% over the forecast period.

"We are entering the age of much more efficient natural gas markets, with additional benefits for energy security," said IEA Executive Director Maria van der Hoeven in a statement.

"While demand growth is driven by the Asia-Pacific region – and especially China – supply growth for the international gas trade is dominated by private investments in LNG in Australia and North America."

The IEA added that while China will remain a significant importer, half of its new gas demand will be met by domestic resources, most of them unconventional.

Liquefied natural gas (LNG) is tipped to meet most of this demand, with new pipelines also playing a role.

Chinese production is set to grow by 65%, from 117 bcm in 2013 to 193 bcm in 2019.

The IEA added that, in a shift away from the traditional dominance of state-owned suppliers, private-sector operators in Australia, Canada and the United States are taking the lead in the expansion of the LNG trade, which is expected to grow by 40% to reach 450 bcm by 2019.

The group forecasts that half of all new LNG exports will originate from Australia, while North America will account for around 8% of the global LNG trade by 2019 but country's will have to remain vigilant over prices.

"High LNG prices are threatening to crimp demand as many countries are increasingly unwilling, or unable, to afford these supplies – and that could open the door to coal," said van der Hoeven.

"Looking ahead, unless we see timely investment in new production and LNG facilities and the reversal of the recent cost inflation of LNG, only a very strong climate policy commitment could redirect Asia's coal investment wave to gas."

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