02-04-04

The growing demand for oil and gas within the next two decades will largely come from developing countries, commanding 42 % of the global energy demand by 2025. Petroliam Nasional (Petronas) president and CEO Tan Sri Mohd Hassan Marican said the oil and gas demand from these markets constitute 34 % of the global energy demand at present.

It is expected to grow to 42 % by 2025, he said in a keynote address read by Gas Business Petronas vice president Abdul Rahim Hashim at the International Gas Distribution and Utilisation Expo and Conference in Kuala Lumpur.

For the next 25 years, fossil fuels will continue to provide 85 % to 90 % of the global energy needs.

"In reality, by 2020, some 90 % of the energy supply for the entire world will still come from fossil fuels," Hassan said. He said the current trend of gas demand signals that the share of natural gas in the global energy mix will increase to 28 % by 2025.

Oil was gradually introduced following its discovery in the 1850s and world oil consumption increased with the advent of industrialisation in the West. Meanwhile, natural gas has been making a steady inroad as an important fuel during the 1990s. During the last two decades, the advantages of natural gas have become increasingly clear, propelling it as a dominant component of global energy business.

Gas consumption in Asia-Pacific, South and Central America and Africa are expected to grow above the 2.8 % average annual rate between 2001 and 2025, but the increasing pressure for cleaner energy source will drive future pattern of energy usage to incline towards gas.

"The demand for gas as a cleaner fuel will continue to rise. More emphasis towards gas exploration and exploitation, especially in developing Asia, Central and South America, which are positioned close to demand centres, will be a trend," Hassan said.

Technological evolution may reshape the gas industry soon. A floating offshore production facility could be 40 % cheaper than building an onshore terminal as well asallowing operational flexibility. Going forward, natural gas, however, is projected to remain as the fastest growing energy source with a growth rate of 3.6 % for the 2004-2025 period.

Another emerging economic uncertainty facing the future of the gas industry is the addition of new LNG supply capacity. Natural gas is abundant, with proven reserves totalling over one trillion barrels of oil equivalent. Russia possesses 30 % of known reserves while another 25 % lie under the Iranian South Pars and the Qatari giant North Field.

"If West Asia decides to exploit this advantage, LNG could potentially become a widely traded commodity globally. Even in the present scenario, LNG is already fast becoming a global commodity," he said.

LNG capacity is expected to grow by about 194 mm tpy in the 2003-2025 period. Hassan said LNG pricing could be subjected to immense downward pressure and face direct competition with pipeline gas.

"If this happens, it could potentially change the pricing structure, as pipeline gas competes with LNG for the same markets. Gas-to-gas competition could drive down prices," he added.

While oil and natural gas were expected to chart bigger growth in the future, the share of coal and nuclear power is forecast to decline by 1 % and 5 % respectively.

"However, the future scenario could see possible emergence of the hydrogen fuel. Depending on the pace of technological innovation, this could happen by 2050, perhaps sooner or perhaps later," he said.

Source: Business Times