China’s increasing demand for gas will have ‘major implications’ for the world economy, Fatih Birol said. (PA)
China’s emergence as a major new importer in the world’s energy markets will mark a dramatic shift in the way Russia and other energy producers conduct their business over the next few decades, Fatih Birol, chief economist at the International Energy Agency (IEA) said on Wednesday.
“Russia will remain a cornerstone of the world energy economy in terms of oil, gas, coal and uranium but there will be a shift as new clients emerge, namely China,” Birol said at the IEA’s press conference in London to launch its World Energy Outlook 2011 report.
“This will have major implications for Russia, China and for Europe – in terms of energy, their economies and perhaps even beyond that,” Birol added. Domestic demand for natural gas in China will see a nearly five-fold rise from 110 bcm a year in 2010 to more than 500 bcm a year in 2035, the agency said in its new report.
In China, only 10% of residential households currently have access to gas, compared to a global average of 40%, the agency noted. National policies in China are increasingly supportive of an expanded role for gas in the country, as a means of diversifying the energy mix and reducing local pollution, it added.
The energy world will become more interconnected in the same period, and the Asian continent as a whole will continue to grow in importance. Trade in gas will practically double in the period to 2035, with more gas from Russia and the Caspian region going to Asia, the IEA predicted.
Gas will play an increasingly important role in world energy markets in the next few decades, and in Europe in particular could compete effectively with other energy sources. “Gas will have an impact on different markets. There will be competition between gas and renewables and, especially in OECD countries, gas could replace coal significantly,” said Birol.
“We are entering a golden age of gas. In addition to Russia being the largest exporter and producer of gas, there will be lots of unconventional gas coming to the markets from Australia and other countries,” he added. Gas will become less ‘challenging’ than other commodities in the energy mix, for instance oil, and will have many opportunities to penetrate the market competitively, Birol said.
According to its ‘new policies’ scenario, the IEA predicted that world demand for gas will increase to 4.75 trillion cubic metres in 2035 at an average rate of 1.7% per year. The new policies scenario, which forms the backbone of the agency’s new research, works on the assumption that recent government policy commitments are implanted in a ‘cautious manner’, it said.
By 2035, global gas consumption will have almost caught up with coal consumption and non-OECD countries will account for 81% of growth in global gas demand, the agency said. In addition, the agency predicted that gas will be the only fossil fuel to increase its share in the global energy mix in the period to 2035. Non-OECD countries will account for more than 70% of global gas production by 2035, focused on the existing gas producers namely Russia, the Caspian and Qatar, it added.
Unconventional gas, including tight gas, shale gas and coal-bed methane, will also feature prominently in the new energy mix, according to the IEA. Its share in output will rise from 13% in 2009 to more than 20% in 2035 so long as the industry deals effectively with environmental challenges, the IEA added.
Russia’s energy choices in the coming years will have an important impact on global energy security and sustainability, the agency said. By 2035, Russia will provide more than 30% of the gas imported by the European Union, but also by China, it added. Production from the Yamal peninsula will become the new ‘anchor’ for Russian gas supply and will offset declines in gas production from other parts of Western Siberia.
Russia’s tax regime for gas production needs to come under scrutiny, the agency said. “Russia needs a responsive tax regime in Siberia,” Birol stressed. The Russian economy also needs to diversify so that it is less dependent on energy as a major source of income, he added.
Russian energy efficiency also needs to be dealt with in the coming decades, and could double Russia’s export capacity. “In terms of energy efficiency, Russia is one of the poorest countries in the world. In terms of natural gas, Russia could save 180 billion cubic metres a year, which is the same as its current annual exports, so it could double exports,” he said.
Gas production in Russia is projected to rise from 673 bcm a year in 2010 to 860 bcm a year in 2035, while exports will rise from 190 bcm to nearly 330 bcm, according to the report.
As well as China’s role in the new energy mix, India and the Middle East are set to become increasingly important in the global gas markets, according to the agency. The Indian domestic market is expected to grow from 59 bcm a year in 2009 to 190 bcm a year in 2035, representing 11% of total primary energy demand, it said.
In the Middle East, gas has become a substitute for oil in many cases, becoming the preferred fuel for power generation, the IEA said. Gas use in the Middle East is expected to almost double from 340 bcm a year in 2009 to 620 bcm a year in 2035, which is a growth rate of 2.3% annually. This is partially aided by additional consumption in gas-to-liquids plants in the region, the agency said.
Urgent policy action will be critical to the long-term outlook of the international gas markets, the agency highlighted. “The ongoing concerns of the global economic crisis threaten to shift the government’s attention away from energy issues. Without an urgent change of policy direction the world risks locking itself into an unsustainable energy future,” said Maria van der Hoeven, executive director of the IEA.
China’s looming energy demand to shake up world markets, says IEA
China’s increasing demand for gas will have ‘major implications’ for the world economy, Fatih Birol said. (PA)
China’s emergence as a major new importer in the world’s energy markets will mark a dramatic shift in the way Russia and other energy producers conduct their business over the next few decades, Fatih Birol, chief economist at the International Energy Agency (IEA) said on Wednesday.
“Russia will remain a cornerstone of the world energy economy in terms of oil, gas, coal and uranium but there will be a shift as new clients emerge, namely China,” Birol said at the IEA’s press conference in London to launch its World Energy Outlook 2011 report.
“This will have major implications for Russia, China and for Europe – in terms of energy, their economies and perhaps even beyond that,” Birol added. Domestic demand for natural gas in China will see a nearly five-fold rise from 110 bcm a year in 2010 to more than 500 bcm a year in 2035, the agency said in its new report.
In China, only 10% of residential households currently have access to gas, compared to a global average of 40%, the agency noted. National policies in China are increasingly supportive of an expanded role for gas in the country, as a means of diversifying the energy mix and reducing local pollution, it added.
The energy world will become more interconnected in the same period, and the Asian continent as a whole will continue to grow in importance. Trade in gas will practically double in the period to 2035, with more gas from Russia and the Caspian region going to Asia, the IEA predicted.
Gas will play an increasingly important role in world energy markets in the next few decades, and in Europe in particular could compete effectively with other energy sources. “Gas will have an impact on different markets. There will be competition between gas and renewables and, especially in OECD countries, gas could replace coal significantly,” said Birol.
“We are entering a golden age of gas. In addition to Russia being the largest exporter and producer of gas, there will be lots of unconventional gas coming to the markets from Australia and other countries,” he added. Gas will become less ‘challenging’ than other commodities in the energy mix, for instance oil, and will have many opportunities to penetrate the market competitively, Birol said.
According to its ‘new policies’ scenario, the IEA predicted that world demand for gas will increase to 4.75 trillion cubic metres in 2035 at an average rate of 1.7% per year. The new policies scenario, which forms the backbone of the agency’s new research, works on the assumption that recent government policy commitments are implanted in a ‘cautious manner’, it said.
By 2035, global gas consumption will have almost caught up with coal consumption and non-OECD countries will account for 81% of growth in global gas demand, the agency said. In addition, the agency predicted that gas will be the only fossil fuel to increase its share in the global energy mix in the period to 2035. Non-OECD countries will account for more than 70% of global gas production by 2035, focused on the existing gas producers namely Russia, the Caspian and Qatar, it added.
Unconventional gas, including tight gas, shale gas and coal-bed methane, will also feature prominently in the new energy mix, according to the IEA. Its share in output will rise from 13% in 2009 to more than 20% in 2035 so long as the industry deals effectively with environmental challenges, the IEA added.
Russia’s energy choices in the coming years will have an important impact on global energy security and sustainability, the agency said. By 2035, Russia will provide more than 30% of the gas imported by the European Union, but also by China, it added. Production from the Yamal peninsula will become the new ‘anchor’ for Russian gas supply and will offset declines in gas production from other parts of Western Siberia.
Russia’s tax regime for gas production needs to come under scrutiny, the agency said. “Russia needs a responsive tax regime in Siberia,” Birol stressed. The Russian economy also needs to diversify so that it is less dependent on energy as a major source of income, he added.
Russian energy efficiency also needs to be dealt with in the coming decades, and could double Russia’s export capacity. “In terms of energy efficiency, Russia is one of the poorest countries in the world. In terms of natural gas, Russia could save 180 billion cubic metres a year, which is the same as its current annual exports, so it could double exports,” he said.
Gas production in Russia is projected to rise from 673 bcm a year in 2010 to 860 bcm a year in 2035, while exports will rise from 190 bcm to nearly 330 bcm, according to the report.
As well as China’s role in the new energy mix, India and the Middle East are set to become increasingly important in the global gas markets, according to the agency. The Indian domestic market is expected to grow from 59 bcm a year in 2009 to 190 bcm a year in 2035, representing 11% of total primary energy demand, it said.
In the Middle East, gas has become a substitute for oil in many cases, becoming the preferred fuel for power generation, the IEA said. Gas use in the Middle East is expected to almost double from 340 bcm a year in 2009 to 620 bcm a year in 2035, which is a growth rate of 2.3% annually. This is partially aided by additional consumption in gas-to-liquids plants in the region, the agency said.
Urgent policy action will be critical to the long-term outlook of the international gas markets, the agency highlighted. “The ongoing concerns of the global economic crisis threaten to shift the government’s attention away from energy issues. Without an urgent change of policy direction the world risks locking itself into an unsustainable energy future,” said Maria van der Hoeven, executive director of the IEA.