The global gas industry continued to grow strongly in 2019, reaching new landmarks on consumption and international trade as prices have seen historic lows thanks to abundant supply, supporting the competitiveness of gas, according to the latest report of the International Gas Union (IGU) on Friday.
The report noted that Covid-19 is causing significant uncertainty in the global economy and the gas sector, but technological innovation and policy support can help the industry to bounce back strongly.
According to the IGU, cost-competitiveness is enabling new demand and recent low gas prices around key global hubs, in part due to the pandemic, have garnered much attention.
"However, rising supply and affordable prices were already enabling record gas demand in 2019 in key growth markets like China. LNG imports also hit record highs in Europe, supported by increasing carbon prices. A significant part of the growth came from coal-to-gas switching in major markets like the US and China," it said.
- Security of supply increasing
IGU said that important new pipeline routes from Russia to China and Europe were commissioned in 2019, and new takeaway capacity has been built in the critical supply region of the Permian Basin in the US.
A record number of LNG export projects were approved last year. Once commissioned, these will deliver close to 97 billion cubic meters per year of new LNG supply to the market, the union said.
"Future supply growth is expected to be led by the Middle East, but the US, Russia and Iran are expected to remain the top-producing countries in the medium and long term. China has
seen domestic supply rise by a third in the last five years, and could double its production by 2040. Propelled by growth on the supply side, new LNG import terminals are being built in markets like Southeast Asia to ensure gas delivery to the power and industrial sectors, as domestic supply wanes."
IGU noted that as countries and regions pursue a low-carbon transition, technologies such as biomethane, hydrogen and gas with carbon capture could play an important role, serving to decarbonize sectors of the economy that are currently seen as 'hard to abate', and providing opportunities for long-term growth for the gas industry.
- Hydrogen in the market
The current level of excitement around hydrogen presents an opportunity, according to the union.
Hydrogen is starting to garner policy support and, with enough investment, could abate up to 37% of energy related greenhouse gas emissions, according to the BloombergNEF estimates.
"While clean hydrogen is not yet cost-competitive in many applications, delivered costs could reach around $2/kg in 2030, and $1/kg in 2050, opening up possibilities in a
variety of applications," it said.
It added that for hydrogen to achieve its potential, not only will strong policy action be needed to drive scale, but there will also be a significant need for infrastructure investment.
"Large-scale hydrogen networks will be necessary to connect high-quality production and storage resources to users, which can help lower supply costs, increase security, enable competitive markets and facilitate international trade," IGU underlined.