Natural gas consumption for power generation decreased in 2018, even though net generation from gas-fired capacity increased as a result of the commissioning of 2.27 GW of new capacity in the form of CCGTs (SENER, 2018a). With CCGTs being more efficient than legacy equipment, Mexico’s power infrastructure was able to provide an amount of electricity equal to that in 2017, but with less natural gas consumed. Mexico plans to add another 12 GW of gas-fired generating capacity by end of the forecast period (Figure 1.20).

Figure 1.20. Gas-fired power generation capacity development plan, Mexico, 2018–24

Source: SENER (2018b), Prospectiva de Gas Natural 2018–2032 [Natural Gas Outlook 2018–2032],

http://base.energia.gob.mx/Prospectivas18-32/PGN_18_32_F.pdf.

New gas-fired power generation capacity is likely to increase the role of gas in power generation, while improving the thermal fleet efficiency due to the replacement of ageing turbines by CCGTs.

Power generation is expected to remain the principal driver for natural gas consumption growth in Mexico in the near future, alongside the development of process-related needs in the industrial sector, while the energy sector’s needs flatten due to the absence of growth in domestic oil and gas production.

Middle East

Natural gas consumption in the Middle East is expected to grow at an average annual rate of 2.1% during the forecast period, with total demand to reach almost 600 bcm/y by 2024 from a 2018 level of almost 530 bcm/y (Figure 1.21). This growth will be almost entirely driven by the gas needs of the power generation sector and by gas-intensive industrial sectors such as petrochemicals, accounting for 50% and 32% of incremental demand respectively (Figure 1.21). The growth in gas-to-power is supported by the rapidly rising electricity needs of a growing population (including for cooling and water desalination), and by government policies to replace fuel oil with natural gas in the power sector. Industrial demand, accounting for 30% of total regional gas consumption, is expected to grow as a result of investment in the petrochemicals and chemicals sectors. Residential and commercial gas consumption has limited upside potential in the region as space heating needs are relatively low outside of the Islamic Republic of Iran (“Iran”).

Figure 1.21. Natural gas consumption by country and by sector, Middle East, 2004–24

Power generation and industry drive Middle Eastern gas consumption, together accounting for 90% of demand growth through the forecast period.

Iran

Preliminary estimates indicate that Iranian natural gas consumption grew by 3.2% in the 2018/19 fiscal year (FY), primarily driven by gas-intensive industrial sectors. Natural gas, which accounted for over 90% of the power generation fuel mix in 2017, has been strongly driven by the switch from gasoil and fuel oil, whose share of the power mix declined from 45% in 2013 to less than 10%. It has been reported that gas burn in power generation decreased by 2.8% in 2018 due to internal gas shortages. This coincided with a low level of hydropower output (shrinking by 68% y-o-y), leading to higher diesel and fuel oil consumption in the power sector (NGW, 2019). This means that the objective set last year to completely phase out fuel oil by the end of the FY (March 2018) was not reached. This forecast expects gas-to-power demand to grow at a rate of 2% annually through to 2024, supported by the continuation of the oil-to-gas switching policy and the rising electricity needs of a growing population.

The industrial sector accounts for approximately 30% of total natural gas consumption, with around half from the chemical and petrochemical sectors. Production of petrochemicals increased by almost one-third over the last six FYs, to 53 Mtpa in 2017/18 FY. Petrochemical production rose by almost 4% y-o-y to 55 million tonnes during the 2018/19 FY (21 March– 22 September 2018) (Financial Tribune, 2019a). This supported natural gas demand from the petrochemical plants, growing by 10% y-o-y from 37.2 bcm in 2017 to 40.9 bcm in 2018 (Financial Tribune, 2019b). Natural gas demand from industry – and especially the chemical industry – is expected to continue growing over the forecast period at an average annual rate of 2.7%, supported by the development of new petrochemical complexes. In September 2018 Iran inaugurated the Marjan plant, with a capacity of 1.65 Mtpa of methanol, and the third phase of the Pardis petrochemical plant, with capacity to produce 1.755 Mtpa of urea and ammonia (Platts, 2018). In January 2019 it was reported that the Lordegan petrochemical plant, with a capacity of 1.755 Mtpa of ammonia and urea, is 94% complete and could start operations in 2019 (Shana, 2019a).