Spurring the shift to natural gas in China and India

Marshall Berg's picture
Marshall Berg, Environmental Consultant, Eagle Environmental Services Inc
Comments: 0

As reported in the BP Energy Outlook 2018, the world energy demand is forecast to grow by 1.3% from 2016 to 2040 per year. With all this growth coming from emerging economies, China and India each account for over a quarter of the increase making the two countries essential to watch. 

With India and China's expanding gas and LNG markets a key theme to discuss at the 2018 Gastech Exhibition and Conference in Barcelona, Gastech Insights spoke with industry professional Marshall BergEnvironmental Consultant at Eagle Environmental Services to discover more on the evolving gas markets and what we can expect to see in the next 5 years.

Gastech Insights: What are the main reasons for China and India’s boom in gas demand in 2017?

Marshall Berg: The primary driver seems to be one that is regulatory in nature. China and India have both experienced great economic growth over the past decade and complimented each country’s population boom. The corresponding user-end energy demand had both countries burning a lot of coal, and with the industrial growth and population spike, there was a lot of air pollution generated. As these countries have become more aware of their environmental impact, and in their transitional period of moving from developing to developed, environmental regulations and air quality standards are starting to be put into place. LNG is much cleaner than coal when combusted, and is generally cleaner to transport and handle.

Gastech Insights: Infrastructure development is key to these markets, could you please give us an update on how the Indian and Chinese Governments are supporting the development of LNG terminals, gas pipeline and storage expansions?

Marshall Berg: Infrastructure is probably the most limiting factor for both countries right now. Chinese Banks are starting to offer loans for companies to help facilitate the need for infrastructure. India’s government has outlined goals for a shift towards natural gas’ share in the Indian energy markets. This comes at the behest of public pressure, as environmental-related health issues are steadily increasing in both countries and their urban centres are some of the world’s worst in air quality. Unlike the US, where a capitalist system more quickly “naturally selects” winners and losers in the energy markets based on price, a directive by Chinese and Indian governments could spur the shift towards a different market composition that has less to do with global price. Coal still plays a large role in providing energy needs for both countries, but natural gas, along with other renewables, are going to steadily eat into the previously coal and petrol dominated energy markets.

Gastech Insights: As the US is becoming one of the world’s largest LNG exporters, what kind of opportunities do the Indian and Chinese LNG markets offer US LNG suppliers?

Marshall Berg: It will all depend. Currently, American LNG is slightly higher for Chinese buyers, as suppliers like Qatar and Australia offer cheaper natural gas via pipeline and even LNG imports are cheaper, as they are more regional. However, with the recent explosion of domestic shale drilling, the US is heavily investing in becoming a net exporter of LNG. As more terminals come online, global prices will be affected significantly by the recent surge of production in the US. If this results in agreeable prices, the US could become a big provider to countries like China and India who are looking to reduce their reliance on ‘dirtier’ fossil fuels. This, in turn, would hurt traditional oil-producing countries like Russia and the members of OPEC.

Gastech Insights: What is next for China and India’s natural gas industries over the next 5 years?

Marshall Berg: It is likely they will become the major global market for LNG. Natural gas-rich countries will be racing to fill this demand, as it will surge when cities start adopting the cleaner energy policies outlined by their respective governments. The need to improve infrastructure for distribution could spark further economic growth within this region, continuing the juggernaut run for each country’s place in terms of economic prowess.

If you would like to share your expert views on the natural gas and LNG industry on a variety of topics, including 'Project & Policy Evolution across India & China'submit your abstract today for a chance to speak at the Gastech Conference 2018.

Image courtesy of Marshall Berg