According to a new report from Fitch Solutions company BMI, BMI analysts highlighted that emerging LNG markets in China, India and Southeast and South Asia have set "ambitious" targets to boost the share of natural gas in their energy consumption mix.
"As part of the region's broader decarbonisation strategy, countries' energy transition policies favour natural gas as a transition fuel, which will remain a key driver of gas demand growth," BMI analysts said in the report. The fuel shift from coal to natural gas in the power sector, coupled with the growing preference for natural gas in petrochemical production and policies to boost the development of urban natural gas markets in emerging Asian countries, will further drive the strong growth in natural gas consumption. ”
Analysts said in the report that they expect natural gas consumption in Asia to grow at 1.2 between 2023 and 2033With an average annual rate of growth of 9%, "total gas consumption will increase from 921 billion cubic meters in 2022 to 1,132 billion cubic meters in 2033". "We expect Asian LNG imports to further increase from 324 billion cubic meters in 2023 to 448 billion cubic meters in 2033, with a significant portion coming from India and China," the analysts added. ”
BMI analysts warned in the report that Asia will continue to face a shortage of natural gas** to keep pace with demand growth, which they said would lead to an increased reliance on LNG imports outside the region. "The trajectory of LNG demand growth in Asia will continue to be influenced by the acceleration of the replacement of coal and refined fuels with natural gas in the power and industrial sectors," the analysts stressed in the report. ”
China will continue to be a key driver of long-term gas demand growth in Asia, with the report outlining that China will contribute nearly 48% of the incremental gas consumption, analysts noted in the report. "China's natural gas consumption is expected to grow at a rate of 2.2 per year between 2023 and 2033," the analysts said in the reportWith an average growth rate of 5%, total demand will increase from 369 billion cubic meters in 2023 to 470 billion cubic meters in 2033. In addition to strong demand growth in the power, residential and commercial sectors, natural gas demand in the petrochemical sector is expected to grow further as state-owned enterprises increasingly focus on the chemical production of ethane. Sinopec and PetroChina are investing in ethylene plants that use ethane as a feedstock, they said.
Analysts noted in the report that the downside risk to China's natural gas consumption largely depends on the speed at which renewables are developed to replace natural gas in the power sector. "The aggressive renewables growth target is the most obvious and biggest threat to natural gas, although it may be beyond our ** period," the analysts added. China has set targets for non-fossil fuels, led by low-cost renewable energy sources such as solar and wind, to account for 25% of the energy mix by 2030 and 80% by 2060. ”
BMI analysts revealed in the report that they expect China's LNG imports to increase to 95 billion cubic meters in 2024, "due to new long-term LNG contracts starting in 2023". "The introduction of a third-party access system by state-owned companies has facilitated the import of LNG by private companies, which are currently active in the LNG market to secure long-term LNG** agreements," the analysts noted in the report. There are currently nearly 10 private LNG importing companies active in China's LNG export business, and some of them are investing in LNG terminals. Major private LNG companies, including ENN Energy, JOV Group and Guanghui Energy, are investing in their own LNG terminals, while foreign companies such as BP, Shell, Pacific Oil and Gas and SK E&S have secured third-party access or minority stakes in LNG terminals to facilitate LNG imports into Chinese mainland. ”
Despite the challenges posed by infrastructure constraints and competition from low-priced pipeline gas**, many of these companies have invested in developing their own import terminals, analysts said in the report. "In addition, China's LNG import growth will be driven by the continued expansion of LNG storage capacity in coastal areas," the analysts added. Under the 14th Five-Year Plan, China aims to expand its natural gas and LNG storage capacity by 2025 to cover 40% to 50% of its natural gas consumption. ”
In the report, analysts stressed that China continues to favor pipeline gas imports "given the low cost of China's domestic consumption." "Russia, Turkmenistan, Kazakhstan and Myanmar are the main importers of pipeline gas**, which is usually consumed in the north and west of the country," they said. The implementation of the proposed cross-border gas pipeline from Russia and Turkmenistan would certainly increase China's natural gas**, but in the long run, it could undermine China's LNG contract activity. ”
According to the latest statistical review of World Energy by the Energy Institute (EI), natural gas consumption in the Asia-Pacific region in 2022 was 907.1 billion cubic meters. This figure accounted for 23% of total natural gas consumption that year, down 2. year-on-year, as outlined in the report3%。The report shows that from 2012 to 2022, natural gas consumption in the Asia-Pacific region grew by an average of 32%。
The report outlines that the Asia-Pacific region ranked second in terms of natural gas consumption in 2022. According to the report, North America ranked first with 1,099.4 billion cubic meters, and the Middle East ranked third with 560.6 billion cubic meters.
According to the report, U.S. natural gas consumption accounted for 27% of total natural gas consumption in 20229%, and in 2022, gas consumption in the Middle East accounted for 14% of total gas consumption in that year2%。
The report highlights that the U.S. data increased by 4 percent year-on-year7%, and the data for the Middle East fell 03%。The report outlines that U.S. natural gas consumption grew by an average of 2. per year from 2012 to 20225%, the average annual growth rate of natural gas consumption in the Middle East is 32%。(Compiled by Xiao Chen).
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