Natural gas

The outlook for gas demand depends on the speed of the energy transition

Growth driven by emerging economies

In Current Trajectory, natural gas demand increases to around 4,700Bcm by 2035, close to 20% higher than in 2023. Over 80% of this growth stems from emerging economies, led by China, India and other emerging Asian economies, as well as the Middle East. The most important source of demand growth in emerging economies comes from the industrial sector, especially the chemical sector and light industry. That higher industrial demand is broadly matched by the combined impact of increasing use of natural gas in buildings and the power sector.

Gas demand in most developed markets falls

In the developed world, natural gas demand outside of the US is broadly flat or falling over the first half of the outlook in Current Trajectory as declining use in buildings is partially offset by increases in power and transport. The main exception is the US where domestic US gas demand grows by almost 15% by 2035, with most of that gas being used to support increasing power generation (see Natural gas).

Global gas consumption broadly plateaus over the final 10 years of the outlook in Current Trajectory. The use of natural gas in much of the emerging world continues to increase, led by emerging Asian economies (other than China). But this growth is increasingly offset by falling demand in developed markets, as the use of natural gas in buildings and industry is crowded out by growing electrification, and gas loses share to wind and solar in power markets.

In contrast to the first half of the outlook in Current Trajectory, in which China is the single largest source of demand growth, China’s use of natural gas broadly plateaus after 2035.

Gas demand falls in fast transition

In contrast, natural gas demand in Below 2° peaks by the end of this decade, such that by 2035 it is back close to current levels and by 2050 is around 50% lower.

The use of natural gas in emerging economies continues to grow through the first half of the outlook, but this is offset by falling demand in developed markets. This fall in gas demand in developed markets is driven by the increasing electrification of buildings and industry, together with the impact of natural gas losing share in the power sector. Gas demand in developed markets peaks by the end of this decade in Below 2°.

The falls in natural gas demand become more broadly based in the second half of the outlook in Below 2°, with the use of natural gas in emerging economies also declining. The greater government support and pressure for decarbonization means that by 2050, almost 60% of the remaining use of natural gas is combined with carbon capture.

LNG trade is underpinned by gas demand in emerging Asia

US and Middle East emerge as major LNG export hubs

In Current Trajectory, LNG exports increase by over 60% by 2035. Most of this demand growth is met by the US and the Middle East, who emerge as the dominant supply hubs for global LNG, accounting for over 50% of LNG exports by 2035.

LNG trade continues to increase in the second half of the outlook in Current Trajectory, albeit at a slower pace, as global natural gas consumption plateaus (see Natural gas). The US more than accounts for the growth in global LNG exports post 2035, helped by the continuing competitiveness of its natural gas resources.

Russian LNG

Russian LNG exports continue to be constrained by international sanctions over the first part of the outlook. However, as the impacts of international sanctions decline in Current Trajectory, the continuing growth in global LNG demand allows Russian exports to expand, reaching around 80Bcm by 2050, up from 45Bcm in 2023.

LNG trade falls in fast transition

Although LNG trade increases robustly through the rest of this decade in Below 2°, it then declines through the 2030s and 2040s as the pace of the energy transition accelerates, causing global gas demand to decline (see Natural gas). By 2050, LNG exports are around 25% below their 2023 level, with US exports falling proportionately more than those from the Middle East, reflecting the closer proximity of the Middle East to the most resilient LNG markets in emerging Asian economies.

LNG exports underpinned by demand in emerging Asia

The sustained growth of LNG demand in Current Trajectory is underpinned by increasing gas consumption in emerging Asian economies which together account for over half of the increase in global gas demand over the outlook.

Gas production in these emerging Asia economies is broadly flat over the first half of the outlook, before edging lower in the 2040s.

Moreover, access to additional pipeline gas for these economies is limited, except for China which sees some increase in imports of piped gas in the late 2030s as the Power of Siberia 2 comes on stream.

As a result, almost the entire growth in gas demand in emerging Asian economies in Current Trajectory is met by increasing LNG imports. The increase in these economies’ imports of LNG more than account for the entire growth in global LNG demand.

Natural gas markets are impacted by both geopolitical factors and new sources of demand

Meeting EU gas demand

The EU is heavily dependent on imports of natural gas, importing around 90% of the gas it consumed in 2023. In 2021, prior to the war in Ukraine, the EU imported almost a third (140Bcm) of the gas it consumed via pipelines from Russia. By 2024, pipeline imports from Russia had declined to around 25Bcm. The EU responded to that loss by reducing its overall consumption of gas and increasing its imports of LNG.

Increased role for LNG imports

In Current Trajectory, pipeline imports from Russia fall further, to around 15Bcm, as the EU seeks to reduce its dependency on Russian energy. This loss of gas supplies is compounded by declining domestic gas production. Total EU gas consumption in 2035 is little changed from 2023, with the additional shortfall in supply met by a combination of increases in pipeline gas from outside of Russia and an expansion of LNG imports. LNG imports account for 40% of EU gas demand in 2035 in Current Trajectory, only a little above their share in 2023, but more than double their share prior to the war in Ukraine.

EU gas consumption falls by around 45% in the second half of the outlook in Current Trajectory. Even though European production continues to decline, the fall in EU gas demand allows it to reduce its imports of LNG to below levels seen prior to the war in Ukraine.

EU gas consumption declines earlier and more quickly in Below 2°, such that by 2035 it is 35% below 2024 levels and 80% lower by 2050. This weaker demand outlook means EU imports of LNG in 2035 are below 2023 levels and fall further in the second half of the outlook.

US production of natural gas

US natural gas production increases by around 240Bcm over the first half of the outlook in Current Trajectory.

Around half of that increased production is used to meet the acceleration in US power demand. The growing needs of data centres account for around 40% of the increase in US power, with the remainder reflecting broadly-based increases in power demand.

The other major driver of the increase in US gas production over the next 10 years in Current Trajectory is the need for additional feedgas to support the growth of US LNG exports, which double over this period (see Natural gas). As a result, US LNG exports account for almost 20% of US gas production by 2035, compared with a little over 10% in 2023 and less than 1% in 2010.