Abstract.

Natural gas will play an increasing role in the energy basket of the 21st century. Overall world energy demand is expected to grow at less than 2% per annum in the foreseeable future but the natural gas demand growth rate is projected at 3%. Accordingly, natural gas' market share will grow from 23% currently to about 28% by 2010. World LNG demand is projected to grow at 7% per annum, and it will double LNGs contribution to the energy basket from 1% currently to 2% in 2010.

The availability of pipeline gas in certain markets such as Europe and North America limits LNG growth opportunities in these areas for the time being. Near term, LNG in the U.S. will remain primarily a peak shaving resource while European LNG growth will be largely dependent on the reliability of imports from Russia and Africa. The greatest growth in LNG demand will be in the Asia Pacific region, where new demand from emerging countries will supplement growth in Japan/Korea/Taiwan demand. LNG could be a major contributor for satisfying Asia Pacific region's energy needs, provided the huge financing requirements of grassroots LNG ventures do not limit available supplies.

INTRODUCTION

* Natural gas will play an increasing role in the energy basket of the 21st century. Total world energy demand is projected to grow at less than 2% per annum for the foreseeable future. In the emerging economies of Asia, Latin America, Eastern Europe, and the Former Soviet Union (FSU), however, that rate is considerably higher. Governments in these nations are becoming increasingly systematic in determining what is the appropriate national energy mix required to satisfy this demand. Growing environmental awareness, the availability of supply, and the economic and technical efficiency of natural gas suggest it will play a larger role in the energy mix of the future. As a result of this emerging global preference for natural gas, energy industry participants are taking a closer look at their own gas positions. More and more, companies that have traditionally been oilfocused are now reviewing the potential contribution of natural gas ventures to their corporate portfolios.

And, in reviewing the regional requirements for gas, * Natural gas and LNG market estimates contained in this article have been provided by Arthur D. Little, Inc. The estimates are based primarily on historical data compiled by IEA and Gotaas Larsen and supplemented by industry interviews, press releases, and the industry expertise of Arthur D. Little consultants. Estimates reflect the best efforts of Arthur D. Little, Inc. it is evident that economic and logistical factors will limit the ability of pipeline gas to satisfy all of the demand. In the face of that realization,

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