Asia set to account for 60% of global gas demand growth - Wood Mackenzie

London - (Quantum Commodity Intelligence) – Asia will account for 60% of global gas demand growth between 2020 and 2050 due to coal-to-gas switching as domestic gas production declines, according to consulting firm Wood Mackenzie.

Speaking at the Northeast Asia Gas Forum Wednesday, Vice President Valery Chow said, "By 2050, a third of all global gas is expected to be consumed in Asia, up from 22% in 2020."

"We see the greatest upside from emerging markets in South and Southeast Asia, all of which are facing declining domestic gas production. LNG demand growth is supported by the development of new regasification, pipeline, and gas-to-power infrastructure."

Chow further added that coal-to-gas switching is a dominant theme in Asian gas markets for the medium-term, adding that with coal currently accounting for more than 50% of the regional mix, carbon reduction targets will favour gas.

However, Chow cautioned, "…in the face of surging power demand growth, gas and LNG is just one element of the power mix. No single energy source alone will be adequate for meeting this demand. Over the longer term, gas increasingly shifts to peak load as renewables and battery storage become increasingly dominant."

Meanwhile, Wood Mackenzie said carbon-neutral LNG currently accounts for a tiny proportion of overall volume, but they see strong upside.

"Carbon-neutral LNG still comprises a small share of the global LNG market, accounting for less than 1% of delivered cargoes so far in 2021, but demand for these volumes are growing. In the last six months alone, the number of 'green' deliveries has almost doubled from 8 to 14 cargoes," said principal analyst Lucy Cullen.

Benchmark JKM LNG prices are currently trading at around $11/mmBtu, according to Exchange data.

The statement comes as analysts said the high carbon price in Europe has exhausted all coal-to-gas switching, leaving the only coal plants running as those that do not have the capability.