Growth in natural gas demand is expected to slow significantly in the coming years

Growth in global demand for natural gas is expected to slow in the coming years, from an average of 2.5% per year recorded between 2017 and 2021 to 1.6%. This is due to natural gas demand having peaked in developed markets, where declining consumption is not expected to be sufficiently offset by demand growth in emerging markets. This is according to the International Energy Agency (IEA) outlook.

The IEA said that, following the unprecedented growth seen over the past 10 years, it expects demand growth in the natural gas market to slow significantly. According to the agency, a major factor behind the shift in the global natural gas market was Russia’s invasion of Ukraine last year, which caused an unprecedented increase in the price of the commodity.

The agency added that demand for natural gas peaked in developed markets—which account for around half of global demand and include Asia Pacific, Europe and North America—in 2021, and is expected to decline by around 1% year on year through 2026.

“The accelerated development of renewables and increased energy efficiency are the main reasons for the downward trend in natural gas consumption in these markets,” the IEA said.

The decline in demand in developed markets is expected to be partly offset by demand growth in China, which is expected to account for almost half of global demand growth, and in countries with abundant natural gas reserves in the Middle East and Africa.

Easing tensions in the LNG market

The International Energy Agency also expects the slowdown in global gas demand growth and an increase in LNG export terminal capacity to ease tensions in the gas market.

“The growth in LNG supply points to a transition to a more globalised natural gas market, which will improve resilience and the ability of suppliers and consumers to respond to supply or demand shocks,” the agency added.

According to the IEA, LNG export terminal capacity is expected to increase by 25% between 2022 and 2026, and the United States is expected to strengthen its position as the world’s largest LNG exporter thanks to the construction of new liquefaction facilities.