BP's latest scenarios for gas demand out to 2050 put consumption higher mid-century than it previously anticipated.
This year's BP Energy Outlook, published on Wednesday, focuses on two scenarios, both at the extreme of transition outcomes. The 'Current Trajectory' scenario — which is not consistent with a 2°C carbon budget — places weight on climate policies already in force. The 'Paris-consistent' Net Zero scenario assumes there is a significant tightening in those policies.
The Current Trajectory has gas demand increasing from 3.99 trillion m³/yr in 2022 to 4.73 trillion m³/yr in 2050 (see demand graph), slightly up on the 4.62 trillion m³/yr estimate in last year's similar New Momentum scenario.
While the Net Zero scenario has demand increasing slightly to 4.02 trillion m³/yr by 2030, it sees 1.8 trillion m³/yr by mid-century, against 1.66 trillion m³/yr projected last year. And roughly 80pc of gas demand is used with carbon capture, use and storage (CCUS) by 2050.
The difference between the two scenarios when it comes to gas demand is stark — a gap of almost 850bn m³/yr by 2035, or a fifth of potential demand by then.
The wide gap between scenario outcomes for gas — with gas demand growing by 19pc under the Current Trajectory and plummeting by 58pc under Net Zero by mid-century — reflects two significant opposing trends, BP said. The first is increasing demand in emerging economies as they grow and industrialise. The second is a shift away from natural gas to greater electrification and lower-carbon fuels. But the net effect of these depends on the speed of the energy transition.
Also underpinning BP's projections are trends common to both scenarios. One is that energy demand grows more strongly in emerging economies, driven by rising prosperity and living standards. Another is that the structure of this demand will change as fossil fuels are replaced by a growing share of low-carbon energy.
LNG demand will rise by 2040
Growing consumption in emerging economies will drive LNG demand higher by 2040 compared with 2022 under both BP's scenarios, but under the Current Trajectory it will rise until 2050 while under Net Zero it will peak by 2030.
BP estimates that LNG demand will steadily rise to 988bn m³/yr by 2050 under the Current Trajectory scenario from 543bn m³/d of traded volumes in 2022 (see LNG graph).
But the firm sees LNG demand growing until 2030, rising to 718bn m³/yr before falling to 586bn m³/yr and 311bn m³/yr in 2040 and 2050, respectively.
The differential of 60bn m³/yr between the two scenarios in 2030 depends largely on whether the EU and UK continue to use LNG as a substitute for imports of pipeline Russian gas, or they turn to alternative energy sources "combined with faster gains in energy efficiency", BP said.
Russian gas exports set to fall by 2030
BP estimates that Russian exports will fall by 30-40pc by 2030 from pre-2022 levels because sanctions against Russia will limit the expansion of LNG exports.
But from then, exports from Russia could increase slightly by 2040 and further by 2050 to 252bn m³/yr under the Current Trajectory scenario from 227bn m³/yr in 2021 (see Russian exports graph). Growth in LNG exports will drive the overall increase, which would more than double to 104bn m³/yr by mid-century from 2021.
On the contrary, the Net Zero scenario has Russian exports falling to 83bn m³/yr by 2050, with pipeline exports to China accounting for the greatest share at 34bn m³/yr that year.
Pipeline deliveries to countries excluding China are forecast never to recover to pre-2022 levels and could reach a maximum of 70bn m³/yr by 2050 under the Current Trajectory scenario.
US and Middle East to remain main producers
Gas production will largely depend on demand for LNG exports in the coming years, but will later depend on the speed of the energy transition, BP said.
While global gas production is forecast to increase to 4.73 trillion m³/yr by 2050 to meet demand from emerging economies under the Current Trajectory, BP estimates that the regional distribution of production will remain roughly the same — the US and the Middle East covering 43pc of production by 2050. Gas production was 4.04 trillion m³/yr in 2022 and the US and the Middle East accounted for 42pc of total output that year.
The Net Zero scenario has production remaining roughly the same by 2030, but then falling, especially in 2040-50, and running at 1.8 trillion m³/yr by 2050, corresponding with falling gas demand under the scenario. And combined output from the US and the Middle East would still cover 57pc of global gas production.
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