November 10, 2009 / 2:46 PM / 9 years ago

IEA sees gas glut until 2015, rising coal role


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LONDON, Nov 10 (Reuters) - Global gas demand looks set to fall this year and the market is likely to remain oversupplied until 2015, despite a rise in demand when the economy begins to recover, the International Energy Agency said.

In its annual World Energy Outlook published on Tuesday, the IEA said demand for gas for industry and power generation could fall sharply this year, particularly in Europe, leading to a possible 3 percent drop in global demand.

Gas consumption could bounce back globally from next year, if the global economy recovers, rising by an average of 2.5 percent a year from 2010 to 2015 driven by increased gas burning for electricity generation.

But gas supply is still likely to swamp demand until the latter part of the next decade, keeping prices low and threatening investment in new production facilities that will be needed later, the IEA warned.

The IEA’s chief economist Fatih Birol said much of the oversupply would be a result of the United States losing its appetite for imported gas.

"The growth of unconventional gas supply in the United States is set to increase. Almost all domestic gas consumption will come from unconventional gas," he told journalists in London.

The energy adviser to 28 rich industrialised countries sees natural gas demand rising by an average of 1.5 percent per year to 4.3 trillion cubic metres (tcm) in 2030, under its reference scenario, but sees strongest growth in coal demand.



COAL ROLE

The IEA reference scenario, in which governments make no changes to existing energy policies to combat climate change, global coal demand is seen rising by an average of 1.9 percent a year to 2030, driven by a 2.5 percent annual increase in electricity demand.

"Coal remains the backbone fuel of the power sector worldwide," the IEA outlook says, predicting coal’s share of the generation mix would rise by three percent to 44 percent in 2030.

"Growth in (coal) production is dwarfed by China’s 61 percent share of incremental global production, as it strives to satisfy a near doubling of domestic demand."

Under its reference scenario of world energy trends the IEA sees coal demand rising more strongly than any other fuel to nearly 7 billion tonnes of coal equivalent in 2030. (Reporting by Daniel Fineren and Ikuko Kao; editing by Sue Thomas)



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