Recovery for gas demand will hinge on the pace the global economy emerges from recession, but it is expected to hit 1578 billion cubic meters by 2013, the International Energy Agency said in its medium-term outlook for energy markets Wednesday.

Gas demand recovery in Europe however is expected to lag behind improvement in the Organization for Economic Co-operation and Development North America area, and the OECD Pacific region, the Paris-based agency said.

"Two revolutions took place on the supply side the much anticipated one was the growth of liquefied natural gas capacity, and the continued growth of U.S. unconventional gas production," the report said.

LNG capacity is seen growing 50% between 2009 and 2013, however an increase in LNG supply is not forecast to take place until later in 2010 to 2011, "which will test the resilience of LNG markets in regions where demand will increase at a slow pace," the agency noted.

LNG trade worldwide grew by 5.3% to 245 billion cubic meters in 2009, according to the report, although the agency pointed out that the dramatic expansion of liquefaction capacity has been partially offset by sluggish performance of some existing LNG exports.

"Technical difficulties have become the 'norm,' rather than the exception including unplanned outages, feed gas issues in Algeria and Nigeria , long ramp-up periods at new production facilities," it added. These have all hampered export plans.

World gasdemand slumped by 3% in 2009 as a result of the credit crunch, posting the biggest decline since the 1970s. The agency said this was exacerbated by the boom in U.S. unconventional gas supply. Consequently a glut of gas has built up worldwide, and one of the most important factors for the market's future will be gauging the pace this overhang can be cleared.

While it is hard to see a tightening supply situation in Europe before 2015, despite the decline of domestic production, much uncertainty lies in Asia, the Middle East and Africa.

The IEA said the impact of tighter gas markets in the OECD Pacific area may "spill" into other regions however, lifting buying elsewhere.

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