Rising natural gas consumption in China and India will underpin strong global gas demand in the near term, according to UK bank HSBC.
China's demand for natural gas will surge to 260bn m³ by 2015, up from 110bn m³ at present, regional head of oil and gas research at HSBC Sonia Song said today. Chinese state-owned oil firms are likely to undertake more mergers and acquisitions as well as focus on developing unconventional gas to meet rising demand.
China plans to build a third west-east pipeline to receive gas imports from Turkmenistan and central Asia, as well as construct 12 more LNG regasification terminals.
Chinese gas prices are regulated, but Song expects Beijing's gas pricing structure to move closer to a market-based system in the long term. In the short term, persistent inflationary pressure is likely to prompt the country's economic and planning body the NDRC to delay raising domestic fuel prices while international crude oil prices increase. The regulated pricing system for natural gas in China will pose a dilemma for producers and investors in the short term, she added.
HSBC expects structural demand to remain strong globally, as Asia-Pacific needs more commodities to develop. But rising debt levels in the US will slow global growth in the short term.
HSBC expects Brent crude to average $90/bl in 2012. US bank Goldman Sachs expects global economic growth, led by emerging markets and a fall in crude production from non-Opec producing countries, to keep crude prices high. The Brent crude price is expected to rise as high to $130/bl over the next 12 months, Goldman Sachs said.