Growth in natural gas demand will slow to 1.5% per year globally by 2021.
That’s according to the International Energy Agency (IEA) which last year predicted a gas demand growth of 2% for the same period.
Cheaper coal prices and strong renewables growth are among the reasons which are blocking gas from expanding more rapidly in the power sector, it added.
While gas demand growth is predicted to remain “weak”, global LNG exports will increase “substantially”.
The IEA expects LNG capacity to increase by 45% during the same period, mostly from the US and Australia which it predicts, will rival Qatar as the world’s largest LNG exporter.
A weak LNG outlook for Japan and Korea, which are the world’s top two buyers, means that new supplies will need to find other markets. China, India and the Association of Southeast Asian Nations (ASEAN) will emerge as key buyers, the IEA added.
Fatih Birol IEA Executive Director said: “We see massive quantities of LNG exports coming on line while, despite lower gas prices, demand continues to soften in traditional markets.
“Unwanted LNG supplies will look for a home in Europe, due to the flexibility of its gas system and well developed spot markets. As a result, intense competition will develop among producers to retain or gain access to European customers. We are at the start of a new chapter in European gas markets.”