China, India and their contrasting appetite for gas
However, should India manage to develop a robust gas market, its gas demand could possibly rival China's, shares the speaker...
(Picture Credit: EMA)
About a third of the world's incremental gas demand over the next two decades will come from China, propelling it towards true gas superpower status. As consulting firm Wood Mackenzie's Head of Asia Pacific Gas Power Research, Gavin Thompson, put it: "China is the global gas demand story".
Thompson, speaking at the Gas Asia Summit held during SIEW 2012, noted that China's potential for unconventional gas development is generating a lot of excitement. However, the sector faces a number of specific challenges such as the lack of market pricing, land access, water and environmental compliance.
China has set ambitious targets for shale gas development, but these are likely to be impeded by near-term challenges. Investment and drilling activity levels, critical to future shale output, are still limited in scale today. Gas price reform can be a means to stimulating shale gas activities--future breakeven prices for shale gas decline as efficiency increases, its competitiveness against coal in China will be a compelling story.
Nonetheless, given the challenges, he expects that coalbed methane and coal-to-gas will contribute more to China's unconventional gas supply than shale gas, up to 2024. The factors that could derail the largest energy consumer's appetite for gas, he said, are more severe economic contraction or greater gains in energy efficiency.
With falling indigenous oil production and existing challenges in coal supply, natural gas production can be increased. As a more efficient and cleaner option than oil or coal, natural gas holds the greatest potential to balance the share of oil and coal in the power and transport sectors. Gas availability, natural gas grid and local distribution network are some factors that can induce gas demand. Greater coherence and coordination in India's energy policy can be a contributing factor as well. Should India eventually develop a robust gas market, its gas demand could potentially match that of China's.
By :Violet Chen, EMA