Persistent weak demand in European markets will slow the growth of natural gas demand over the next five years, says the International Energy Agency (IEA).

The Paris-based organization has published its Medium-Term Gas Market Report, in which it says that global natural gas demand will grow at 2.4 per cent per year to 2018, slightly lower than a previous forecast of 2.7 per cent.

However the so-called ‘golden age’ of gas is "in full swing" and the fuel will continue to increase its share in the global energy mix, says the IEA.

"Gas is already a major fuel in power generation, but the next five years will also see it emerging as a significant transportation fuel, driven by abundant supplies as well as concerns about oil dependency and air pollution," said IEA Executive Director Maria van der Hoeven. "Once the infrastructure barriers are tackled, natural gas has significant potential for clean-energy use in heavy-duty transport where electrification is not possible."

The medium-term outlook indicates that the abundance of shale gas in the USA and increasingly stringent environment policies in major markets such as China will help to slow demand for oil.

Natural gas demand globally will rise from 3427 billion m3 in 2012 to 4000 billion m3 in 2018. Demand will remain weak in Europe because of the recession and low carbon prices. Exports from the Middle East will decline due to a rapid rise in domestic demand – especially from the power sector.

"The persistent tightness of LNG markets is a major concern as it limits the contribution of gas to sustainable energy security," Ms. Van der Hoeven said. "It also highlights the need to tackle energy subsidies and improve energy efficiency in major producing countries as well as to adopt supportive policies for LNG investment."

According to the IEA the tightness of LNG supplies will enable some recovery of Russian exports to Europe. However Russia’s premier position as a global natural gas supplier will only be maintained if it can develop the infrastructure required for large-scale exports to Asia.

Natural gas production from unconventional sources will remain a "phenomenon" in the medium term, says the IEA.