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Natural Gas: from Scarcity to Abundance – Part Two

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Natural gas resources worldwide have also experienced strong growth during the past few years, achieving the record level of 199 593 billion cubic metres (bcm) of proven natural gas reserves in 2012. In contrast to previous forecasts that the world’s natural gas supply would be depleted in only 60 years, the latest estimates suggest reserves lasting for more than 250 years.1 The biggest of these are in Russia (+2676 bcm), Iran (+530 bcm), and the US (+290 bcm, mainly recently-discovered shale gas). An Israeli-based firm, Delek Energy, confirms large natural gas deposits in the Leviathan basin, 80 miles off the shores of Haifa, which could hold as much as 600 bcm of natural gas: enough to meet Israeli demand for at least 100 years. Production could begin as early as 2017, insulating the country from higher and fluctuating fuel prices.

After several years of stagnation, the natural gas industry has bounced back to long-term stability and growth. Worldwide natural gas production has been particularly strong in the last couple of years, with marketed production, which accounts for 80% of gross production, climbing by 2.8%. This growth is reminiscent of pre-recession values and is poised to be the precursor of long-term expansion trends worldwide. Global consumption of natural gas has seen a corresponding increase, but at the more moderate rate of 2%, the excess supply being consumed by the LNG (liquefied natural gas) market. LNG has an export potential to those areas where either a natural gas supply does not exist or is not price competitive. The momentum of gas developments in Asia-Oceania,2 particularly in China, has been the main driver of the consumption growth of natural gas. When the expected supply of shale gas hits China, its energy market will have a worldwide impact through inexpensive imports. In contrast, European gas demand was negatively affected by its sluggish economy, as well as the higher price of natural gas compared with coal.

In comparison to oil and coal, which are readily transportable, natural gas price differentials between the three main regional markets (US, Europe and Japan) are accentuated by the lack of worldwide mobility of natural gas. In the absence of pipelines, natural gas transportation can be handled through LNG, which has traditionally been expensive due to the lack of dedicated and costly infrastructure chains required at both the delivery and receiving ends. The LNG market accounts at present for only about 10% of the natural gas supplied via pipelines,3 but when developed further will, similar to oil, streamline world natural gas prices. Russia has long been the major supplier of natural gas to all of Europe, providing about 23% of the continent’s needs. At present, Russia holds about 28% of the world’s gas supply.4 However, with more and more natural gas expected to come online through shale and ice gas, Russia’s dominance will subside and consumers will surely enjoy lower natural gas prices.


  1. HIS CERA report 2012.
  2. Australia and other nearby countries (14 in total).
  4. US Energy Information Administration.

Written by T. Abbas. This is the second part of a three-part article, originally published with additional Figures in the November 2013 issue of World Cement. To see the article in its entirety, subscribers can sign in here.

To read part one of this article, please click here

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