The USA is set to challenge Qatar and Australia for dominance of the global LNG market by 2022, according to the IEAs newly released report, Gas 2017
The USA will account for 40 per cent of the world's extra gas production to 2022, thanks to the remarkable growth of its domestic shale industry, and more than a fifth of global output, says the IEA.
The global natural gas market is undergoing a major transformation driven by new supplies coming from the USA to meet growing demand in developing economies and as industry surpasses the power sector as the largest source of gas demand growth.
This evolution of the role of natural gas in the global energy mix has far-reaching consequences on energy trade, air quality and carbon emissions, as well as the security of global energy supplies, according to the new report.
Global gas demand is expected to grow by 1.6 per cent a year for the next five years, with consumption reaching almost 4,000 bcm by 2022, up from 3,630 bcm in 2016. China will account for 40 per cent of this growth.
Production from the USA's Marcellus field will increase by 45 per cent between 2016 and 2022, even at current low price levels, as producers increase efficiency and produce more gas with fewer rigs.
More than half of the production increase will be used for liquefied natural gas (LNG) for export. By 2022, the IEA estimates that the USA will be on course to challenge Australia and Qatar for global leadership among LNG exporters.
"The US shale revolution shows no sign of running out of steam and its effects are now amplified by a second revolution of rising LNG supplies," said Dr Fatih Birol, the IEA's executive director.
US LNG will be a catalyst for change in the international gas market, diversifying supply, challenging traditional business models and suppliers, and transforming global gas security, says the IEA. A new wave of liquefaction capacity is coming online at a time when the LNG market is already well supplied. This LNG glut is already affecting price formation and traditional business models - and attracting new LNG-consuming countries like Pakistan, Thailand and Jordan.
At the same time, this ample availability of LNG is also creating new competition with pipeline gas supplies, which could benefit consumers. The expansion of US exports, which are not tied to any particular destination, will play a major role in increasing the liquidity and flexibility of LNG trade.
The recent standoff involving Qatar, which supplies around a third of the world's LNG, and neighbouring countries has also underscored potential risks to gas supply security. "Even in a well-supplied market, recent events remind us that gas security remains a critical issue," said Dr Birol.
