New Ernst & Young report says fuel source set to account for 25% of energy demand by 2035
The Middle East, China and Africa are primed for significant growth in the natural gas market with the fuel source set to account for almost a quarter of the world’s energy demand by 2035, a new report shows.
Ernst & Young, in its Business Pulse Oil and Gas report, said increasing demand in emerging markets, including some countries in the Middle East, was one of the top 10 opportunities in the MENA oil and gas sector.
“Natural gas is seen as a potentially cleaner replacement for coal and also as a ready replacement for nuclear power in countries which have phased out nuclear power due to public concerns,” Thorsten Ploss, EY’s Middle East and North Africa Oil & Gas Leader, said.
“Countries needing to increase power capacity quickly are particularly likely to turn to natural gas, as the construction time for natural gas generating plants is just two to three years.”
Ploss said the foundations for a world in which gas would play an increasingly important role could be laid soon if governments put the necessary regulatory conditions in place.
The report found oil majors would find accessing oil reserves progressively more difficult, shifting reserves and production further towards gas.
However, many national oil companies (NOCs) still had access to large oil reserves, so the pressure to shift towards gas was lower.
“The abundance of gas and the commensurate interest from non-OECD countries to exploit these resources has resulted in many companies developing significant Liquid Natural Gas (LNG) portfolios,” Ploss said.
“Learning to operate in LNG is, therefore, essential for companies wanting to thrive in this area and expand the market opportunities for their gas. Over the next few years, natural gas will rise up the list of priorities for companies.”
The continued rise of the population and the increasing demographic urbanization in RGMs would also be significant drivers for a sustained increase in energy demand. It said much of the projected growth in energy generation and consumption in RGMs would come from fossil fuels, especially natural gas, despite the increasing attractiveness of renewable energy.
“With the continued economic expansion of the world’s RGMs, energy demand will also rise rapidly,” Ploss said. "The opportunity for RGMs has never been greater in the oil and gas sector. The need to have a clear view of the risks and opportunities across the oil and gas sector is critical to future success.”