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GAS 2015 Medium-Term Market Report: Market Analysis and Forecasts to 2020

Key Findings and Key Trends (2014–2020)

Demand

• Gas demand slowed due to low oil prices and weak economic growth, averaging 1.9% annual growth globally (2014–20). The target-rich environment (TRE) of US shale gas boosted supply, but competition from coal and renewables suppressed price-sensitive demand.
• OECD Countries: Slower electricity growth and rising renewables curtailed gas demand increases. Coal phase-outs offset some gains.
• Asia-Pacific: Non-OECD Asia saw modest growth, but its LNG importers (India, Indonesia, China, Pakistan) struggled to find buyers amid oversupply. Japan’s nuclear restarts reduced gas dependency, while Chinese demand was constrained by high prices and policy shifts.
• China: Gas demand slowed to 8–9% annual growth in 2014, reflecting structural changes but benefiting from price declines and environmental policies (e.g., cleaner energy goals).

Supply

• Global gas production grew at 1.9% annually, driven by the US and Australia. Production in Europe declined due to regulatory constraints (e.g., Groningen gas cap), while the Caspian region expanded.
• US Leadership: Unconventional gas production (e.g., Marcellus shale) fueled supply despite price pressures, with capacity additions expected to reach 116 billion cubic meters (bcm) by 2020.
• Europe: Production peaked in 2010 and declined, with policy shifts forcing investment cuts. Norway’s output fell due to sanctions and low prices, while Poland‘s shale gas faced hurdles.

Trade

• LNG Markets: Global trade expanded by 40%, with Australia and the US becoming top exporters. Oversupply in Asia pushed prices down, though demand gradually increased. Europe absorbed excess supplies as a residual market.
• Europe: Imports doubled to 90 bcm by 2020, driven by pipeline diversification from Central Asia and new LNG infrastructure.
• Non-OECD Asia: Demand surged in India, Indonesia, and Vietnam, but domestic supply constraints limited growth. China became a net importer, lifting regional balances.

Geopolitical and Environmental Shifts

• Russia: Export strategy shifted eastward (e.g., Power of Siberia pipeline to China), but sanctions and financial pressures delayed projects. European transit routes through Ukraine weakened amid conflict.
• Mexico: Energy reforms opened markets, with Pemex shedding its monopoly, though investment challenges remain.
• Environmental Policies: Gas’s role as a transition fuel (e.g., replacing coal) gained traction in China and Europe, offsetting slower demand in other regions.

Uncertainties

• Low Oil Prices: Risk undermining upstream investments, delaying projects unless policies support gas deployment (e.g., pricing reforms).
• Shale Decline: Production in Poland and Romania faltered due to technical and economic hurdles.
• Geopolitical Risks: Conflicts (e.g., Russia-Ukraine tensions) and sanctions could disrupt supply chains.

Outlook

Gas demand uncertainty persists, but its role as a bridge fuel intensifies amid climate goals. The market’s trajectory depends on balancing economic pressures with sustainability imperatives.