Slides from Launch of Medium-Term Gas Market Report 2013
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Slides from Launch of Medium-Term Gas Market Report 2013

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Slides used at the launch of the International Energy Agency's (IEA) new edition of the Medium-Term Gas Market Report (MTGMR), for 2013. The launch event was held at the International Economic Forum ...

Slides used at the launch of the International Energy Agency's (IEA) new edition of the Medium-Term Gas Market Report (MTGMR), for 2013. The launch event was held at the International Economic Forum in St. Petersburg, Russia on June 20, 2013.

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Slides from Launch of Medium-Term Gas Market Report 2013 Slides from Launch of Medium-Term Gas Market Report 2013 Presentation Transcript

  • Launch Event: St PetersburgLaunch Event: St Petersburg International Economic ForumLaszlo VarroHead, Gas Coal and Power MarketsHead, Gas Coal and Power Markets© OECD/IEA 2013 
  • Gas slows down but still expands its role Global gas consumption grows at 100 bcm/year, or a Russia in 5 yearsor a Russia in 5 years. 5 year growth revised down by 70 bcm, due to EU demand and Middle East/Africa supplyEU demand and Middle East/Africa supply At 2.4%/year, gas is growing faster than oil or overall energy use but continues to fall behindoverall energy use but continues to fall behind coal Transportation emerges as a major demand p g jdriver, accounting for 10% of gas demand growth, driven by China and the United States© OECD/IEA 2013 
  • The United States continues to dominate non‐conventional developmentp Technological improvements inCANADABakkenimprovements in seismic, drilling and frackingAntrimNew AlbanyUinta (CBM)Piceance (CBM)Powder River (CBM)UNITED STATES OF AMERICANiobrarag “Mass manufacturing” San Juan (CBM)Raton (CBM) MarcellusDevonianUticaFayettevilleBarnettHaynesvilleEagleMontereyWoodfordBarnett/Woodfordgmethods in oil field servicesEagleFordBasinShale gas productionThis map is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.MEXICO Strong financial boost from liquids© OECD/IEA 2013 With US markets saturated, Canadian production growth depends on LNG exports
  • Recovery of gas prices causes a blip in the march of gasin the march of gas2000Gas and coal fired power generation in the US, historical and projectedTwh14001600180080010001200200400600coal gasIn the absence of constraints on coal‐plant operation power‐sector0002010 2011 2012 2013 2014 2015 2016 2017 2018© OECD/IEA 2013 In the absence of constraints on coal‐plant operation, power‐sector emissions increase by 120 million tons, despite shale gas
  • Security issues, depletion and domestic demand growth lead to tight LNG supplyLNG liquefaction plantsi h li i l i biliwith political instabilitywith declining gas outputwith surging domestic demand© OECD/IEA 2013 Supply shortfalls double the market impact of Japanese demand increase
  • New LNG supply is predominantly backed by long‐term contractsbacked by long term contracts140160bcm80100120140204060800202013 2014 2015 2016 2017 2018Portfolio LNG The rest of the world Other AsiaPortfolio LNG and secondary re‐exports both play an increasing roleChina Japan Capacity© OECD/IEA 2013 increasing role
  • Project timing and cost management: will we ever hear good news?will we ever hear good news?4 500USD/tonne Investment costs of LNG projects2 5003 0003 5004 00005001 0001 5002 0000Completed project Project under construction Cost increase after FIDPersistent cost inflation and oil indexed contracts put LNG© OECD/IEA 2013 Persistent cost inflation and oil‐indexed contracts put LNG at a disadvantage to coal across Asia
  • Projects in advanced stage could transform the US into the number 3 LNG exporter (after Qatar and Australia)5060iCameronBCM4050to Japan Cove PointRussiaCameronContract signed2030DOE FreeportEgyptAlgeria1020ApprovedSabine PassOmanYemen0Projects with DOE approval or signed export contracts LNG from other countriesOman© OECD/IEA 2013 Japanese utilities have signed contracts equivalent to the post‐Fukushima demand increase
  • Gas can’t beat coal unless it beats it in China700MtoeFive year incremental consumption 500600(MTCR2012, MTGM2013)3004001002000China RoWCoal Natural gas© OECD/IEA 2013 
  • China: air quality is emerging as the key question and gas is the answerquestion and gas is the answerEvery year till 2018 New gas heating in 3 5 New gas heating in 3.5 million homes 7 million tons of industrial coal consumption replaced by gasby gas A new CCGT in every 6 weeks (but a new coal )plant every week)China adds the combined gas demand of Germany, © OECD/IEA 2013 France and Belgium in 5 years, equivalent to 27% of global demand growth
  • Chinese non‐conventional gas developments can not keep up with demand •Complex geology•Population density inPopulation density in Sichuan, water scarcity in Tarim/Ordos•Open regulatory issues•Open regulatory issues•Large investments in coal gasification (25 bcm by 2018)China adds almost the gas output of the Netherlands, but with only 100 shale wells so far the shale ramp up is© OECD/IEA 2013 with only 100 shale wells so far the shale ramp‐up is beyond 2020
  • China adds the current German imports to its import needimports to its import need Myanmar imports remain upstreamremain upstream constrained Russian imports Russian imports unlikely before 2020 Central Asia: Central Asia: expanding infrastructure but high pricesChina absorbs all the production increase in Central Asia© OECD/IEA 2013 China absorbs all the production increase in Central Asia and one third of the global increase of LNG supply
  • Russian gas: the East is the manifest destiny?destiny?•Production constrained by EU and domestic demand•Surging independent production backed by NGLsSource: Gazprom© OECD/IEA 2013 •Asian exports depend on capital‐intensive infrastructure
  • Japan: nuclear restoration stabilizes LNG demand and eliminates demand rationingg400Gas fired and nuclear power generation in Japan, historical and IEA assumptionsTWh300350200250gasnuclear501001500502010 2011 2012 2013 2014 2015 2016 2017 2018© OECD/IEA 2013 Projected nuclear restoration is equivalent to a 45 billion dollars Australian LNG project
  • Policy‐driven decommissioning of old coal plants enables gas to recoverp gGas plant utilization remains below the level© OECD/IEA 2013 Gas plant utilization remains below the level expected at the time of investment
  • Broad range of obstacles to shale developmentdevelopment © OECD/IEA 2013 
  • Shale gas in Europe: ramping up by a factor of 100?80Shale well drilling201360402020120Poland Eagle Ford in a typical week in 2012© OECD/IEA 2013 
  • Natural gas in transport has a bigger impact on oil demand than biofuels and electric cars combined Traditionally concentrated in Iran, Pakistan, India, Argentina and Brazil Shale gas revolution in the USd d Stranded gas resources Oil dependency concerns Emission advantages© OECD/IEA 2013 Transport sector use absorbs 10% of the growth of gas production
  • US: rolling out the infrastructure Increasing market share for CNG buses B d f LNG Broad range of LNG trucks is becoming available Large investments in infrastructureT h l i l Technological progress in refilling and small scale liquefactionSource: Clean Energy Fuels Watch out for railroadsSource: Clean Energy Fuels© OECD/IEA 2013 Due to infrastructure costs, after the rollout, the wholesale gas price will have little impact on competitiveness
  • Despite import dependency and slow ramp up of shale, China goes for gas in transportp , g g p Concerns about particulate emissionsparticulate emissions Large concentrated mass transit systemsmass transit systems Simultaneous rollout of pipeline andof pipeline and refilling infrastructure© OECD/IEA 2013 The ramp‐up of gas as a transport fuel in China is 4 times the growth of the US
  • Launch Event: St PetersburgLaunch Event: St Petersburg International Economic ForumMaria van der HoevenIEA Executive Director© OECD/IEA 2013