Rapid gas demand growth expected through 2040 as countries implement clean air policies will require capital of $2 trillion (£1.5 trillion) to develop about 200 billion barrels of oil equivalent of new gas resources, consultancy Wood Mackenzie said.
Asia’s gas demand is growing by an average of nearly 3% a year over the next two decades with gas demand expected to double in China and India by 2040, as current low prices boost pro-gas policies, the company said in a white paper released on Thursday.
This in turn will need about $1.36 trillion of capital investment to bring both discovered reserves and yet-to-find resources on-stream with proposed liquefied natural gas (LNG) projects requiring another $0.6 trillion, WoodMac said.
However, a Paris Agreement goal of limiting a rise in average world temperatures to well below 2 degrees Celsius before the end of the century, could see gas demand peaking earlier and “dramatically alter this outlook” and require a much lower capital of $700 billion of new investment, it added.
As investors globally increasingly focus on low-carbon projects, the gas market’s carbon intensity will come under scrutiny, WoodMac said.