HOUSTON (Dow Jones) -- Energy executives see world demand for natural gas growing significantly, absorbing excess supply and tightening gas markets.

The need for natural gas in developing countries--as a source fuel for power generation and to meet requirements to cut the heat-trapping gases blamed for global warming--are expected to drive long-term gas demand.

That outlook for natural gas given at IHS Cambridge Energy Research Associates' CERA Week conference in Houston underscores the bright future the energy sector sees for the fuel, which has been hard-hit by the economic downturn.

"We have suffered a huge economic crisis, and the world of gas energy has been totally turned upside down," said Philippe Boisseau, president of gas and power for the French energy company Total SA (TOT, FP.FR).

The executive said natural gas markets are flexible enough to absorb the excess supply that has resulted from new shipments of super-chilled liquefied natural gas and, in the U.S., from vast new supplies from prolific onshore fields known as shales.

These new supplies have put pressure on prices, allowing natural gas to take a bigger share of the electricity generation market from coal. The fuel also burns cleaner than coal, releasing about half of the carbon emissions.

But natural gas still faces image problems.

Jean-Francois Cirelli, president and vice chairman of GDF Suez SA (GSZ.FR), said natural gas "has to be restored as a clean fuel," Cirelli said, urging CERA attendees to "defend the gas brand."

The problem is particularly acute in Europe, where shortages provoked by tensions between Russia, a big gas supplier, and Ukraine, a transit country, have resulted in unpopular price spikes.

Tom Walters, president of gas and power marketing for Exxon Mobil Corp. (XOM), said ever increasing demand will create a "supply gap."

"Our challenge is to develop new supplies," Walters said.