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China to lead as Asian gas demand booms

China's need for a clean and abundant energy source is mirrored throughout the region

Increasingly urgent electrification and environmental goals will fuel surging natural gas demand across Asia over the next decade, with China leading the way, industry leaders said today.

"Asia will be the game-changer for the energy revolution. Its role as the largest natural gas destination will only expand," said former IEA director Nobuo Tanaka at World Gas Conference 2018, noting Asia's rapidly expanding consumption and readiness to adopt new technologies, such as battery storage and driverless cars.

China will be at the forefront of that growth, as momentum towards strong air-quality policies and Beijing's commitment to greener energy takes shape, noted panelists. The government has ordered millions of homes to switch from coal to natural gas and electric heating to counter rising air pollution.

Yalan Li, chairperson at Beijing Gas Group, said that while coal has fueled economic growth since China's "reform and opening up" 40 years ago, its current contribution to the global energy mixaround 46%also causes severe air pollution and greenhouse gas emissions.

Li said natural gas is "abundant, affordable and the best partner of renewables." It's on track to replace coal as the country's major fuel, and by 2024 consumption could hit 400 billion cubic metres, he said.

But that's far from inevitable, said Li, who suggested widespread support for "clean coal" and insufficient gas storage - which currently sits at just 3% of consumption - are headwinds to greater gas adoption.

"We still have lots of work to do before natural gas is China's main source of fuel… Major breakthroughs are needed to enhance efficiency", said Li.

Reports from around the globe are bullish. An IEA report released on Tuesday projected that China's demand for the fuel will rise by 60% between 2017 and 2023, to 376 bcm.

The China-driven global demand boom may lead to a stretched liquefied natural gas market next decade if production investments stagnate, according to the IEA. Sellers need to make decisions to pursue projects in the next few years to ensure adequate supply by 2023.

Natural gas offers the continent the fastest route towards affordable, cleaner energy, but with millions of people still burning wood for domestic purposes, widespread adoption is still some way off.

"It's all about the fundamentals in Asiapopulation growth, middle class, and a shift in social norms", said Anuar Taib, executive vice president & CEO Upstream, Petronas, recalling how his family had to rely on wood and coconut shells for cooking fuel.

"Gas is the best source to ensure Asia breaks away from energy poverty", he said.

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