Demand for natural gas will continue to rise amid green transition, executives say

Around $4.9 trillion worth of investment is needed to avoid supply shortfall by 2030

Mansoor Al Hamed, chief executive of Mubadala Energy, speaks during a panel session at Adipec in Abu Dhabi. Victor Besa / The National

Demand for natural gas will continue to rise amid green transition efforts and there is a need to boost investments in the sector, according to top executives.

“Gas will continue to be a key to the energy mix and for the decades to come,” Mansoor Al Hamed, chief executive of Mubadala Energy, told the Adipec event on Tuesday. “So therefore, in order to accelerate the energy transition, it's essential to invest in the gas and gas infrastructure.”

Around $4.9 trillion of investment is needed in the gas business to avoid any supply shortfall by 2030, he said, citing S&P figures.

Natural gas, which emits 50 per cent less carbon dioxide than coal, is considered a key fuel as the world focuses on cutting emissions.

Global LNG (liquefied natural gas) trade hit a high of $450 billion in 2022 amid a surge in European demand after Moscow attacked Ukraine, according to the International Energy Agency.

“There is a robust demand for gas, despite the price volatility. Demand continues to be strong in Southeast Asia where Mubadala Energy has a significant operating position,” he added.

Mubadala Energy, a unit of Mubadala Investment Company, has assets and operations spanning 11 countries, primarily in the Mena region, Russia and Southeast Asia.

The company’s portfolio is around 70 per cent gas, with a working interest production in 2022 of about 500,000 barrels of oil equivalent per day.

Adnoc is also bullish about demand growth for natural gas in the coming years.

Gas demand is increasing in Asia and Europe, and China will lead the future, according to Ahmed Alebri, chief executive of Adnoc Gas.

He said Adnoc saw Southeast Asia as a robust “growing demand” region, with high demand for gas also in Japan, South Korea and Taiwan.

Adnoc Gas, which has access to 95 per cent of the UAE's natural gas reserves, supplies more than 60 per cent of the country's needs. It has also been focusing on exports amid a rise in demand for LNG.

In August, Adnoc Gas, estimated to have the seventh largest gas reserves globally, signed a five-year liquefied natural gas supply agreement with Japan Petroleum Exploration.

The company valued the agreement at between $450 million and $550 million at the time.

Last month, it signed an agreement to supply liquefied natural gas worth $450 million to $550 million to a subsidiary of state-owned energy giant PetroChina.

“We know that natural gas is the least polluting fossil fuel and it is our belief that it is going to stay for a longer horizon maybe four to five decades rather than talking on 10 years or 15 years,” said Akshay Kumar Singh, managing director and chief executive of India’s Petronet LNG.

“So maybe a lot of debate is going on whether it is a transition fuel or destination fuel, but I think that it is going to be a destination fuel. The reason being that the natural gas being available in abundance, there is no dearth of the reservoir and there is no dearth of the consumer.”

Gas consumption will also increase in India as its economy grows and its population increases, he added.

“Our energy basket, particularly with respect to natural gas, is going to increase from current 6 per cent to 15 per cent by 2030,” Mr Singh said.

“This is the stated government policy and all our efforts are being made to ensure that this percentage is achieved, which translates into [an] almost four times increase in present gas consumption.”

India, Asia’s third-largest economy, is focusing on cutting emissions as it aims for a net zero target by 2070 and is turning towards low-emitting fuels like gas.