Gas exporters need stable, predictable policy to vie for investment: Yergin [Global Gas Perspectives]
Governments of would-be natural gas exporters must offer stable and predictable policy regimes to compete effectively for investment, Daniel Yergin, vice chairman of S&P Global, said in an address at the OGT-2024 forum in Turkmenistan’s capital Ashgabat on October 23.
“There’s going to be competition among countries that wish to be exporters for investment dollars coming from global companies who are going to be more cautious and careful, because where they put their money, evaluating risk is a very important element,” he explained. “Countries want to have competitive fiscal and operating regimes and regulatory regimes. In order to attract that investment, you have to be stable and predictable in your terms and in regulation.”
Yergin’s address via video link was among the opening speeches at OGT-2024, where Turkmen officials presented the opportunities for international investment in Turkmenistan, which ranks fourth globally in proven natural gas reserves after Russia, Iran and Qatar.
The global energy transition is set to be more protracted and difficult to achieve than many anticipated in the aftermath of the COVID-19 pandemic, Yergin continued.
“It is unfolding as a multidimensional and multi-speed set of changes playing out quite differently in different parts of the world, at different rates of speed, with different technologies and with different mixes of energy,” he said. “And it reflects a wide variety of situations, individual situations of individual countries and regions.”
Policy will play a key role, but so will “old-fashioned economics and technology, and the time that’s involved in changing a huge energy related system and infrastructure of all types,” he said.
The future trajectory for gas demand varies greatly across different markets, he said, noting that consumption had peaked or was about to peak in many OECD countries. The US could prove an exception, however, in light of the rise of data centres and AI, requiring large amounts of electricity. In Europe, consumption could halve by 2050, while its LNG imports could peak as early as the late 2020s.
Long term, demand will be driven by growth in Asia but also in Latin America and also Africa, where a quarter of the world’s population will live by 2050. China’s gas demand will be about 45% higher in 2050 than it is today, but both its consumption and its LNG imports will peak before that point.
“We know that natural gas resources are abundant and fairly widely distributed around the world. They're capable of meeting global demand at a relatively low cost,” Yergin said. “Global LNG trade will play an increasingly significant role in global gas supply, linking emerging geographically disparate consuming centres with the world's gas producers.”
S&P expects global gas demand to increase by 10% by 2050, though the share of natural gas in total energy demand should remain stable at between 20 and 25%, he said.
Renewables will replace gas as the main means of decarbonising energy, particularly in regions that already consume significant amounts of gas like Europe and North America, as well as established gas markets like Japan and Korea. “Maybe not as fast as some people think in some of those markets – in fact we see some of them needing more gas to meet their energy needs,” he said.
“But what has become clear is the necessity of natural gas as a balancer for renewables. In emerging regions, gas has become an important fuel for electric power, acting as a bridge and a connector between traditional fuels like coal and wood. Eventually these countries will move more towards renewables, but again, not as fast as people believe, especially given their power needs and the growth of their populations.”