Towards an efficient LNG market in the Asia ‐ Pacific
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Towards an efficient LNG market in the Asia ‐ Pacific

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As the only option for intercontinental gas trade, LNG is the critical link to globalising gas markets, and to the spread of the benefits of gas. ...

As the only option for intercontinental gas trade, LNG is the critical link to globalising gas markets, and to the spread of the benefits of gas.

But there is no global gas market as there is for oil, mainly due to the capital intensity of its infrastructure. That certainly applies to LNG, and industry will have to mobilize very large investments to maintain supply security.

At the same time, gas markets are in flux. Between unconventional gas, questions over nuclear, and varied renewables policies, the entire business
model is in transition.

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Towards an efficient LNG market in the Asia ‐ Pacific Presentation Transcript

  • 1. Towards an efficient LNG market inTowards an efficient LNG market in  the Asia ‐ Pacific Maria van der Hoeven Executive DirectorExecutive Director 10 September, 2013 © OECD/IEA 2013 
  • 2. For gas the Asian century is just  startingstarting 3 000 l Primary energy consumptionMtoe 2 000 2 500 coal gas 1 500 1 000 - 500 WEO 2012 © OECD/IEA 2013  Asia Europe and USA
  • 3. Natural gas is the key to improving  air quality in Asiaair quality in Asia Osaka 1965 Osaka 2013 © OECD/IEA 2013 
  • 4. Economic growth and energy policies will  i th i t f A i i l b lraise the importance of Asia in global gas 30% Share of the Asia‐Pacific in global gas demand 20% 25% 15% 5% 10% 0% 2 010  2 015  2 020  2 025  2 030  2 035  WEO 2012 © OECD/IEA 2013  Due to geology and geography, LNG will have to play  a dominant role in supplying Asia
  • 5. The old business model is an  increasing competitiveness burdenincreasing competitiveness burden 18 20 12/MBtu 14 16 $201 Japan (LNG import) 8 10 12 Europe  (German import) 4 6 8 US (Henry Hub) 0 2 1991 1994 1997 2000 2003 2006 2009 2012 y © OECD/IEA 2013 
  • 6. Security issues, depletion and domestic demand  growth lead to tight LNG supply LNG liquefaction plants i isecurity issues declining gas output surging domestic demand © OECD/IEA 2013  Supply shortfalls double the market impact of  Japanese demand increase
  • 7. New LNG supply is predominantly  backed by long‐term contractsbacked by long term contracts 140 160 bcm 80 100 120 140 20 40 60 80 0 20 2013 2014 2015 2016 2017 2018 Portfolio LNG The rest of the world Other Asia Portfolio LNG and secondary re‐exports both play an  increasing role China Japan Capacity © OECD/IEA 2013  increasing role
  • 8. Are oil and gas still substitute  products?products? 3 000  Oil and gas fired power generation in the Asia Pacific Twh 2 000 2 500  oil gas Twh 1 500  2 000  500  1 000  ‐ 2 010  2 015  2 020  2 025  2 030  2 035  WEO 2012 © OECD/IEA 2013 
  • 9. Is a destination clause still essential  for project financing?for project financing? © OECD/IEA 2013 
  • 10. With non‐conventional technology and new  discoveries, resources will compete for marketsdiscoveries, resources will compete for markets 45% The proportion of proven reserves projected to be  consumed till 2030 35% 40% 20% 25% 30% 10% 15% 20% 0% 5% WEO 2007 WEO 2012 © OECD/IEA 2013  WEO 2007 WEO 2012 In 5 years discoveries and reserve additions exceeded  production by 175 years worth of Japanese demand
  • 11. The United States continues to lead non‐ conventional developmentp  Technological  improvements in CANADA Bakken improvements in  seismic, drilling and  fracking Antrim New Albany Uinta (CBM) Piceance (CBM) Powder River (CBM) UNITED STATES OF AMERICA Niobrara g  “Mass  manufacturing”  San Juan (CBM) Raton (CBM) Marcellus Devonian Utica Fayetteville Barnett Haynesville Eagle Monterey Woodford Barnett/ Woodford g methods in oil field  services Eagle Ford Basin Shale gas production This 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
  • 12. North America is emerging as a major  exporter 70 80 C t t BCM 50 60 Cove Point Russia Contract  signed 30 40 50 DOE Freeport Cove Point Russia Algeria 10 20 30 DOE  Approved Yemen Egypt 0 10 Projects with DOE approval or signed export contracts LNG from other countries Oman © OECD/IEA 2013  Can Henry Hub+ emerge as a price signal for Asia? 
  • 13. Russian gas: the East is the manifest  destiny?destiny? •Production constrained by EU and domestic demand •Surging independent production backed by NGLs Source: Gazprom. Note that political boundaries are not endorsed by the IEA  © OECD/IEA 2013  •Asian exports depend on capital‐intensive infrastructure
  • 14. Facilitating market development  3rd party access and  unbundling in gas AND electricity  Wholesale price  liberalizationliberalization  Flexible infrastructure  Encouraging entry of new g g y supply  Diversifying the primary  i ( lenergy mix (nuclear,  renewables) © OECD/IEA 2013  Investment security and producer confidence needs to be maintained
  • 15. Towards an efficient LNG market inTowards an efficient LNG market in  the Asia ‐ Pacific Maria van der Hoeven Executive DirectorExecutive Director 10 September, 2013 © OECD/IEA 2013