MILAN: Global growth in natural gas demand could be derailed by a glut of cheap coal unless gas producers succeed in making it more affordable, the International Energy Agency (IEA) said on Tuesday.
Gas producers risk losing out in key growth markets to rival and more environment-damaging fuels, the IEA, the West's energy watchdog, said in its "Gas: Medium-Term Market Report 2014".
"High LNG prices are threatening to crimp demand as many countries are increasingly unwilling, or unable, to afford these supplies - and that could open the door to coal," IEA Executive Director Maria van der Hoeven said in a statement.
Asian buyers of shipped liquefied natural gas (LNG) such as Japan, India and South Korea are forming joint buying clubs aimed at forcing down prices although with little discernible success so far.
In Europe, costly LNG has prompted buyers to reduce deliveries and spurred heavy coal use instead, while Indian buyers have struggled to import the fuel without incurring substantial losses.
The price of spot liquefied natural gas (LNG), gas condensed to liquid and shipped on tankers, is currently trading at $12.60 per mmBtu. Last winter it hit highs of $20 per mmBtu, and is expected to re-visit those peaks this year.
The IEA report sees global demand rising 2.2 percent annually through 2019, milder than the 2.4 percent rate projected in last year's outlook.
It expects gas consumption in China's coal-reliant economy to nearly double over the next five-year period, compensating somewhat for slowdowns elsewhere.
Beijing's drive to curb air pollution has spurred it to step up efforts to replace coal with gas in power generation.
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