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EY Price Point:
global oil and gas
market outlook
Q1 | January 2022
Q4 in review
Gary Donald
EY Global Oil & Gas Assurance Leader
gdonald@uk.ey.com
Andy Brogan
EY Global Oil & Gas Leader
abrogan@uk.ey.com
Q1 | January 2022 EY Price Point: global oil and gas market outlook
Page 2
As the last quarter of the second pandemic year draws to a close, we continue to see heightened contrast
between the medical and economic points of view. While COVID-19 cases are close to their all-time highs, so
are equity prices, and a leading investment bank declared (on 2 December, 2021 after the Omicron outbreak in
South Africa) that it was “optimistic about the possibility of a vibrant 2022.” When news of the variant hit in
late November, the markets were rocked by the prospect of yet another round of local mobility restrictions and
an interrupted return to normal international travel patterns, on top of the Biden Administration’s announced
release of 50 million barrels of crude from the US Strategic Petroleum Reserve. So far though, with OPEC
standing by its planned gradual return to normal production, oil prices have stabilized, albeit below where they
were in mid-November. Henry Hub prices, always at the mercy of the weather, responded predictably to a
warmer-than-normal early winter in the US, falling from US$6.60/MMBtu in early October to below
US$4.00/MMBtu by mid-December. In Europe and Asia, following a short reprieve at the start of the quarter,
piped natural gas prices have spiked again on concerns triggered by Russian troop buildups on the Ukraine
border and uncertainties surrounding the Nordstream 2 pipeline. Looking forward, OPEC and the U.S. Energy
Information Administration (EIA) in their last forecasts of the year both projected that 2022 oil demand would
be above what we saw in 2019. Although time will tell if those forecasts are realized and other events could
intervene, the response to new virus outbreaks is well-practiced and the trade-off between public health and
economic reality has tipped toward a cautiously optimistic view.
• What will the impact of the Omicron variant be on governments, central banks, consumers and companies?
• Will monetary restraint impact economic growth and energy demand?
• When will the long-standing connection between economic growth and oil demand start to break down?
• How will supplies needed to meet growing oil and gas demand be funded?
Q1 theme
Q1 | January 2022 EY Price Point: global oil and gas market outlook
Page 3
The theme for Q1 is divergence. Oil and gas markets moved downward during the quarter, but for completely
different reasons, while LNG markets were unfazed by the emergence of the Omicron variant or the possibility
of tightening by central banks to control inflation. Doubts about the long-term future of petroleum are at odds
with the economics of oil and gas in the here and now and widely accepted projections of global demand.
The Organization for Economic Cooperation and Development (OECD) Economic Outlook, published in
December, shows “strong but imbalanced” growth with inflation subsiding but settling at rates higher than they
were before the COVID-19 pandemic. The connection between economic growth and oil demand is well-
established, and the most recent U.S. EIA International Energy Outlook calls for demand growth just below 1%
for as far as the eye can see. The macroeconomic environment is always a risk, and the tapering of the central
bank COVID-19 stimulus in response to inflation is inevitable. The most recent measure of consumer prices in
the US showed increases at rates not seen since the early 1980s, and Eurozone inflation is currently running at
its highest point in the history of the euro.
Economic growth and predictions of continued oil demand growth mean positive medium- and long-term
fundamentals for oil, gas and LNG, notwithstanding conventional wisdom about the future of petroleum. IOC
financial results in Q3 were strong, and equity prices increased at double the rate of the broader market. In
spite of this, the funding for upstream oil and LNG projects is still difficult to pinpoint. Consensus capital
spending estimates for oil and gas majors for 2022 are 21% higher than 2021, but just over half of what they
were in 2014.
Q1 trends
EY Price Point: global oil and gas market outlook
Page 4 Q1 | January 2022
OPEC
dominance
clear
Market
resilient
despite
multiple
shocks
Henry Hub
and LNG take
different
paths
IOC
investment to
grow
marginally
Warmer-than normal weather in the US
combined with recovering production
interrupted the rally in Henry Hub prices,
while uncertain Russian supplies and
stressed infrastructure drove prices in
Europe to record levels.
OPEC’s ability to influence the supply and
demand balance was openly questioned
during previous oversupply episodes.
Recovery from the 2020 crisis has been
entirely OPEC-led and given us valuable
clues for how the market might be
managed as energy transition pressures oil
demand.
The 2014-2015 downturn was a turning
point for IOC capital spending. The pandemic
gave the industry another reason to hold the
line on investment, and 2022 projections
show only small increases.
Since April 2020, oil prices have
increased by a factor of 5 and gone up in
14 of the last 19 months. This steady,
consistent rebound has occurred in the
face of unprecedented political, social
and economic turmoil.
Q1 | January 2022 EY Price Point: global oil and gas market outlook
Page 5
Market fundamentals
• Oil markets continued to be undersupplied in the fourth quarter. Global oil demand
grew 2% from the previous quarter, while OPEC, North American producers and others
increased their production.
• Global oil demand increased during the start of the quarter due to robust gasoline
consumption and easing international travel restrictions. As has been the case for the
past two years, COVID-19 hangs over the marketplace, and the recent pause in market
recovery was a direct result of the emergence of a new variant. The IEA, EIA and OPEC
have lowered their demand projections for the rest of 2021 and early 2022. Those
agencies expect global oil demand to expand by 3.3 million barrels per day (mmb/d),
3.5 mmb/d and 4.2mmb/d, respectively, in 2022.
• Supply uncertainty continues as well. OPEC+ has been remarkably disciplined in
restoring output to pre-pandemic levels in step with demand, but analysts forecasted
production could outpace demand. As this upward trend extends into 2022, the US,
Canada and Brazil look set to pump at their highest-ever annual levels, lifting overall
non-OPEC+ output by 1.8 mmb/d in 2022.
Source: U.S. EIA
Supply expected to outpace demand
• LNG and natural gas markets have recently moved in opposite directions. After
reaching US$6.32/MMBtu, at the beginning of the quarter, Henry Hub futures have
fallen to US$3.75MMBtu while the international natural gas spot prices including JKM
and Dutch TTF rose strongly at 2% and 8%, respectively, during the same period.
European LNG prices reached US$42/MMBtu, which was the highest in four years.
• Natural gas prices are always strongly influenced by the weather. On a weighted-
average basis, heating degree days in the US are 14% below normal. Historically, that
translates to a roughly 7 Bcf/day reduction in natural gas demand from a base of about
100 Bcf/day. Production continues to come back from its pandemic lows. Output at the
end of Q3 was 4 Bcf/day higher than in Q3 2020, which was 5 Bcf/day lower than Q3
2019.
• European prices have skyrocketed after a brief reprieve. A colder-than-expected winter,
low inventory, tight Russian supplies and the recent escalated tensions between
Ukraine and Russia have conspired to keep traders nervous and prices high.
LNG and Henry Hub prices move in opposite directions
Source: Refinitiv
Movement to oversupply
Movement to undersupply
3
5
7
20
30
40
50
10/1/2021 10/15/2021 10/29/2021 11/12/2021 11/26/2021 12/10/2021
Henry
Hub
LNG
LNG prices vs. Henry Hub prices (US$/MMBtu)
NYMEX JKM swaps front month NBP front month
TTF front month Henry Hub front month
Q1 | January 2022 EY Price Point: global oil and gas market outlook
Page 6
Market fundamentals
OPEC+ in charge
• The pandemic has reinforced our views on the influence OPEC+ has on the global oil
markets. The oil market recovered from the initial shock of COVID-19 because of
OPEC+ production discipline. Between January and April 2020, OPEC+ countries cut
production by 19%, with Saudi Arabia alone curtailing its output by 500 thousand
barrels, while non-OPEC production fell by only 9% during the same period. This
supported the oil prices to climb almost without interruption since mid-2020.
• At its most recent Ministerial Meeting, OPEC+ agreed to hold to its previous plan to
increase production by 400 thousand barrels/day. The decision came amid the
emergence of a new COVID-19 variant and its potential to impact oil demand with
renewed travel restrictions. However, the cartel remains optimistic about the demand
growth but is also flexible to swiftly adjust production in the future.
• Going forward, as the structural demand comes in and the focus on decarbonization
accelerates, OPEC oil is likely to have a competitive advantage due to its low cost and
low carbon intensity. This would further give OPEC a larger market share and even
more influence on prices.
Source: OPEC Monthly Oil Market Report and U.S. EIA
Source: U.S. EIA
• In November, the US Government announced a decision to release 50 million barrels
from its Strategic Petroleum Reserve (SPR) with the intention of lowering gasoline
prices for American consumers. The US coordinated this release with five other
countries (including four Asian countries), as OPEC rebuffed requests to increase
production. The volume of the US release was the largest in its history and
unconventional as this was the first time the SPR was tapped in order to control prices.
• In the wake of the announcement on 23 November, crude oil prices increased. The
release had been telegraphed for some time, and January WTI futures had declined
seven percent in the two weeks prior. Three days following the announcement, WTI
prices fell over $10/bbl when the first wave of Omicron variant cases were reported in
South Africa, making the move moot for the moment.
• Analysts are skeptical that the move will have any sustained or significant impact on the
markets. The volumes, while large in absolute terms, are relatively small when spread
out over a meaningful horizon and compared to the potential for OPEC+ members to
offset it with output cuts or foregone output increases.
US and others release strategic reserves
0
20
40
60
80
20
25
30
35
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21
US$/barrel
Million
barrels
per
day
OPEC crude oil production and oil prices
OPEC crude oil production Brent crude oil price
500
550
600
650
700
Jan-20 Jul-20 Jan-21 Jul-21 Jan-22
Million
barrels
Ending stock of US Strategic Petroleum Reserve
Q1 | January 2022 EY Price Point: global oil and gas market outlook
Page 7
Market fundamentals
IOC investment to remain muted in 2022
Source: Institute for Health Metrics and Evaluation (IHME), S&P Capital IQ
• It has been almost two years since the start of the pandemic when crude oil prices
dropped more than 75%. Since then, infections have grown in multiple waves as people
have moved indoors and back out, restrictions have been imposed and relaxed, and
vaccines have been rolled out. Prices have increased steadily, and in the 19 months
since oil markets bottomed out (and went negative), the price of WTI crude has ended
the month higher than it began in 2015.
• Resilience in the economy generally and in commodity and equity markets specifically
can be explained in two ways. The first is OPEC’s track record managing supply and the
market’s confidence that it will step in as necessary. The second is that people and
government have adapted to an environment in which COVID-19 risks are ubiquitous.
Companies have created new ways of working, people have grown restless and appear
comfortable with the risk of illness, and governments are reluctant to intervene and, in
many cases, encourage citizens to resist or ignore restrictions.
• The actual end of the pandemic is nowhere in sight and might never come.
Notwithstanding, we should expect whatever market reactions occur to be transitory.
Markets show resilience
• Capital expenditures by IOCs* are less than half of what they were almost a decade ago.
In 2012, companies invested US$176 billion but only US$81 billion in 2021. The crude
oil price crash of 2014 triggered IOCs to focus on capital discipline, an ethic that was
reinforced by the 2020 COVID-19 pandemic-driven oil price crash.
• Although crude oil prices have now recovered from the pandemic lows, capital and
production discipline continues. In 2022, IOC capital expenditures are projected to
grow by 21% year over year to US$98 billion, nearly 15% lower than the pre-pandemic
2019 capital expenditures of US$114 billion. The tepid recovery in spending can no
doubt be attributed to company and shareholder resistance to grow an asset base that
is commonly believed to be reaching a sunset stage.
• IOCs will continue to invest in their core oil and gas businesses. Although their overall
hydrocarbon investment will largely remain flat in 2022, IOCs plan to ramp up spending
in short-cycle resources to accelerate cash flow generation. With growing shareholder
pressure to reduce emissions, IOCs are increasingly exploring biofuels, carbon capture
and storage, hydrogen and programs to reduce operational emissions.
*IOCs include: BP, Chevron, ConocoPhillips, ENI, Equinor, ExxonMobil, Shell and Total
Source: S&P Capital IQ
0
20
40
60
80
0
200
400
600
800
Feb-20 May-20 Aug-20 Nov-20 Feb-21 May-21 Aug-21 Nov-21
US$
per
barrel
000s
Confirmed COVID-19 infections vs. crude oil prices (WTI)
Daily confirmed cases (000s) Crude oil (US$ per barrel)
0
50
100
150
200
250
2012 2014 2016 2018 2020 2022
Billion
US$
IOC capital expenditure
Brent futures
Q1 | January 2022
Page 8
Brent futures have increased
slightly given global COVID-19
vaccination programs,
increased mobility and the
continued supply discipline of
OPEC+.
Going forward, there will be
continued scrutiny on the
emergence of new COVID-19
variants, OPEC+ supply
discipline, decarbonization and
capital allocation that will
continue to impact medium- to
long-term oil demand and
pricing.
Futures data is effective as of
10 December 2021.
Source: Bloomberg
EY Price Point: global oil and gas market outlook
10
20
30
40
50
60
70
80
90
US$/bbl
Historical Brent Brent futures - December 2021 Brent futures - September 2021
Q1 | January 2022
Page 9
Oil price outlook
For WTI, banks and brokers (on
average) forecast a wider range of
oil prices throughout the forecast
period. Forecasts for Brent are
generally consistent throughout
the forecast period.
Consultants focus primarily on the analysis of a
long-term sustainable oil price, whereas banks
and brokers balance their views on the basis of
current market conditions.
Consultant ranges include estimates of
recognized market consultants. Where consultant
estimates are updated only annually (for example,
the EIA and the IEA), such estimates are included
within the range of estimates from 2024 onward
(or combined with short-term estimates published
by the same consultant) to prevent near-term
ranges being impacted by estimates that are not
considered to reflect current market dynamics.
Brent price estimates derived under the IEA’s
“Stated Policies” and “Sustainable Development”
scenarios (inflation-adjusted to reflect nominal
pricing) are reflected within the consultant ranges
from 2024 onward.
This data is effective as of 10 December 2021.
EY Price Point: global oil and gas market outlook
Note: The wide range of long-term price estimates reflects the degree of uncertainty within the market. Both the lower and upper ends of the range provided are supported by the estimates of credible market participants. Given the width
of the range, the average of estimates should be used as a starting point for the assessment or generation of estimates.
Brent:
Average price per bbl forecast in 2026 — consultants
Brent
Bank/broker and consultant price estimates, ranges
and averages
WTI
Bank/broker and consultant price estimates, ranges
and averages
Source: Bloomberg; bank/broker reports; consultants’ websites and reports
US$69.4 WTI: US$65.5
Average price per bbl forecast in 2026 — consultants
50
60
70
80
90
2022 2023 2024 2025 2026
US$
per
barrel
Bank/broker range Consultants range
Bank/broker average Consultants average
45
55
65
75
85
2022 2023 2024 2025 2026
US$
per
barrel
Bank/broker range Consultants range
Bank/broker average Consultants average
Q1 | January 2022
Page 10
Gas price outlook
For Henry Hub, banks and brokers
(on average) forecast a wider
range of oil prices throughout the
forecast period. Consultant
forecasts for NBP are generally
wider in the short term and
narrower in the long term.
Consultants focus primarily on the analysis of a
long-term sustainable gas price, whereas banks
and brokers balance their views on the basis of
current market conditions.
Consultant ranges include estimates of
recognized market consultants. Where consultant
estimates are updated only annually (for
example, the EIA and the IEA), such estimates are
included within the range of estimates from 2024
onward (or combined with short-term estimates
published by the same consultant) to prevent
near-term ranges being impacted by estimates
that are not considered to reflect current market
dynamics. Henry Hub price estimates derived
under the IEA’s “Stated Policies” and
”Sustainable Development” scenarios (inflation-
adjusted to reflect nominal pricing) are reflected
within the consultant ranges from 2024 onward.
NBP price estimates are scarce, with only six and
three forecasts released by banks and brokers
and consultants, respectively.
This data is effective as of 10 December 2021.
EY Price Point: global oil and gas market outlook
Note: The wide range of long-term price estimates reflects the degree of uncertainty within the market. Both the lower and upper ends of the range provided are
supported by the estimates of credible market participants. Given the width of the range, the average of estimates should be used as a starting point for the
assessment or generation of estimates.
*NBP: National Balancing Point
Henry Hub:
Average price per MMBtu forecast in 2026 — consultants
UK NBP:
Average price per therm forecast in 2026 — consultants
Henry Hub
Bank/broker and consultant price estimates, ranges
and averages
UK NBP
Bank/broker and consultant price estimates, ranges
and averages
US$3.2 GBp55.5
Source: Bloomberg; bank/broker reports; consultants’ websites and reports
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2022 2023 2024 2025 2026
US$
per
MMBtu
Bank/broker range Consultants range
Bank/broker average Consultants average
40
60
80
100
120
140
160
2022 2023 2024 2025 2026
GBp
per
therm
Bank/broker range Consultants range
Bank/broker average Consultants average
Q1 | January 2022
Page 11
Gas price outlook
For both benchmarks, consultants
(on average) forecast a wider
range of prices throughout the
forecast period.
Consultants focus primarily on the analysis of a
long-term sustainable gas price, whereas banks
and brokers balance their views on the basis of
current market conditions.
Consultant ranges include estimates of
recognized market consultants.
JKM price estimates are scarce, with only two
and two forecasts released for banks and brokers
and consultants, respectively.
TTF price estimates are scarce, with only two and
four forecasts released by banks and brokers and
consultants, respectively.
This data is effective as of 10 December 2021.
EY Price Point: global oil and gas market outlook
Note: The wide range of long-term price estimates reflects the degree of uncertainty within the market. Both the lower and upper ends of the range provided are
supported by the estimates of credible market participants. Given the width of the range, the average of estimates should be used as a starting point for the
assessment or generation of estimates.
JKM:
Average price per MMBtu forecast in 2026 — consultants
TTF:
Average price per MMBtu forecast in 2026 — consultants
JKM
Bank/broker and consultant price estimates, ranges
and averages
TTF
Bank/broker and consultant price estimates, ranges
and averages
US$7.5 US$7.1
Source: Bloomberg; bank/broker reports; consultants’ websites and reports
5
10
15
20
2022 2023 2024 2025 2026
US$
per
MMBtu
Bank/broker range Consultants range
Bank/broker average Consultants average
5
10
15
20
2022 2023 2024 2025 2026
US$
per
MMBtu
Bank/broker range Consultants range
Bank/broker average Consultants average
Appendix
Q1 | January 2022 EY Price Point: global oil and gas market outlook
Page 12
Brent oil price estimates
This data is effective as of 10 December 2021.
Source: Bloomberg; bank/broker reports
*Certain price estimates included within the summary above may reflect real vs. nominal pricing as the bank/broker assumptions are not explicitly stated within Bloomberg or the respective reports.
Source: Consultants’ websites and reports; Oxford Economics
Bank/broker 2022 (US$/bbl) 2023 (US$/bbl) 2024 (US$/bbl) 2025 (US$/bbl) 2026 (US$/bbl)
High 79.1 75.0 75.0 76.3
Average 72.3 67.6 67.3 67.2
Median 72.0 67.4 67.3 67.1
Low 64.0 57.5 60.0 57.0
Consultant 2022 (US$/bbl) 2023 (US$/bbl) 2024 (US$/bbl) 2025 (US$/bbl) 2026 (US$/bbl)
High 78.2 72.5 75.7 79.4 81.0
Average 73.7 67.2 67.1 68.1 69.4
Median 72.5 69.4 67.7 67.4 68.7
Low 70.1 54.9 58.3 60.9 60.9
Note: Consultant ranges include estimates of recognized market consultants. Where consultant estimates are updated only annually (for example, the EIA and the IEA), such estimates are included within the range of estimates from 2024
onward (or combined with short-term estimates published by the same consultant) to prevent near-term ranges being impacted by estimates that are not considered to reflect current market dynamics. Price estimates derived under the
IEA’s “Stated Policies” and “Sustainable Development” scenarios (inflation-adjusted to reflect nominal pricing) are reflected within the consultant ranges from 2024 onward.
Appendix
Q1 | January 2022 EY Price Point: global oil and gas market outlook
Page 13
WTI oil price estimates
This data is effective as of 10 December 2021.
Bank/broker 2022 (US$/bbl) 2023 (US$/bbl) 2024 (US$/bbl) 2025 (US$/bbl) 2026 (US$/bbl)
High 71.2 69.0 66.0 66.0
Average 67.4 62.0 59.5 59.2
Median 67.5 60.8 58.0 59.0
Low 61.0 55.5 56.0 52.5
Source: Bloomberg; banks/brokers reports
*Certain price estimates included within the summary above may reflect real vs. nominal pricing as the bank/broker assumptions are not explicitly stated within Bloomberg or the respective reports.
Consultant 2022 (US$/bbl) 2023 (US$/bbl) 2024 (US$/bbl) 2025 (US$/bbl) 2026 (US$/bbl)
High 75.3 70.0 72.4 75.4 76.9
Average 69.7 63.5 63.5 64.4 65.5
Median 70.0 66.3 64.8 64.7 66.0
Low 62.3 53.1 52.5 53.6 55.1
Source: Consultants’ websites and reports; Oxford Economics; EY analysis
Note: Consultant ranges include estimates of recognized market consultants. Where consultant estimates are updated only annually (for example, the EIA), such estimates are included within the range of estimates from 2024 onward (or
combined with short-term estimates published by the same consultant) to prevent near-term ranges being impacted by estimates that are not considered to reflect current market dynamics.
Appendix
Q1 | January 2022 EY Price Point: global oil and gas market outlook
Page 14
Henry Hub gas price estimates
This data is effective as of 10 December 2021.
Source: Bloomberg; banks/brokers reports
* Where brokers have reported figures in US$/mcf, we have used a conversion ratio of 1.037 for mcf conversion to MMBtu.
**Certain price estimates included within the summary above may reflect real vs. nominal pricing as the bank/broker assumptions are not explicitly stated within Bloomberg or the respective reports.
Source: Consultants’ websites and reports; Oxford Economics
Bank/broker 2022 (US$/MMBtu) 2023 (US$/MMBtu) 2024 (US$/MMBtu) 2025 (US$/MMBtu) 2026 (US$/MMBtu)
High 4.4 4.1 4.0 3.7
Average 4.0 3.4 3.4 3.2
Median 4.0 3.4 3.3 3.0
Low 3.8 3.0 3.0 2.8
Consultant 2022 (US$/MMBtu) 2023 (US$/MMBtu) 2024 (US$/MMBtu) 2025 (US$/MMBtu) 2026 (US$/MMBtu)
High 4.5 4.1 4.1 4.2 4.3
Average 4.2 3.4 3.0 3.1 3.2
Median 4.3 3.3 3.0 3.1 3.2
Low 3.9 3.0 2.1 2.1 2.1
Note: Consultant ranges include estimates of recognized market consultants. Where consultant estimates are updated only annually (for example, the EIA and the IEA), such estimates are included within the range of estimates from 2024
onward (or combined with short-term estimates published by the same consultant) to prevent near-term ranges being impacted by estimates that are not considered to reflect current market dynamics. Price estimates derived under the
IEA’s “Stated Policies” and “Sustainable Development” scenarios (inflation-adjusted to reflect nominal pricing) are reflected within the consultant ranges from 2024 onward.
Appendix
Q1 | January 2022 EY Price Point: global oil and gas market outlook
Page 15
NBP gas price estimates
This data is effective as of 10 December 2021.
Bank/broker 2022 (£/therm) 2023 (£/therm) 2024 (£/therm) 2025 (£/therm) 2026 (£/therm)
High 129.8 91.3 89.0 90.0
Average 109.2 71.7 64.0 72.5
Median 108.1 70.0 57.5 72.5
Low 88.0 58.0 52.0 55.0
Consultant 2022 (£/therm) 2023 (£/therm) 2024 (£/therm) 2025 (£/therm) 2026 (£/therm)
High 150.0 90.0 60.0 61.2 62.4
Average 109.1 66.7 54.0 54.7 55.5
Median 115.0 60.1 51.8 52.3 53.1
Low 62.2 50.0 50.3 50.5 50.9
Source: Bloomberg; banks/brokers reports
* Where brokers have reported figures in US$/mcf, we have used a conversion ratio of 1.037 for mcf conversion to MMBtu and the brokers’ forecasted FX rates.
**Certain price estimates included within the summary above may reflect real vs. nominal pricing as the bank and broker assumptions are not explicitly stated within Bloomberg or the respective reports.
Source: Consultants’ websites and reports; Oxford Economics
*Where consultants have reported figures in US$/MMBtu, we have used the particular consultants' forecast FX rate for the purpose of our conversion.
Note: Consultant ranges include estimates of recognized market consultants. Where consultant estimates are updated only annually, such estimates are included within the range of estimates from 2024 onward (or combined with short-
term estimates published by the same consultant) to prevent near-term ranges being impacted by estimates that are not considered to reflect current market dynamics.
Appendix
Q1 | January 2022 EY Price Point: global oil and gas market outlook
Page 16
JKM gas price estimates
This data is effective as of 10 December 2021.
Source: Bloomberg; banks/brokers reports
* Where brokers have reported figures in US$/mcf, we have used a conversion ratio of 1.037 for mcf conversion to MMBtu.
**Certain price estimates included within the summary above may reflect real vs. nominal pricing as the bank/broker assumptions are not explicitly stated within Bloomberg or the respective reports.
Source: Consultants’ websites and reports
Bank/broker 2022 (US$/MMBtu) 2023 (US$/MMBtu) 2024 (US$/MMBtu) 2025 (US$/MMBtu) 2026 (US$/MMBtu)
High 16.0 12.0 10.2 10.1
Average 14.9 10.8 9.3 10.1
Median 14.9 10.8 9.3 10.1
Low 13.8 9.5 8.5 10.1
Consultant 2022 (US$/MMBtu) 2023 (US$/MMBtu) 2024 (US$/MMBtu) 2025 (US$/MMBtu) 2026 (US$/MMBtu)
High 16.8 12.1 10.6 9.1 8.1
Average 16.6 10.5 9.2 8.5 7.5
Median 16.6 10.5 9.2 8.5 7.5
Low 16.4 8.9 7.8 8.0 7.0
Note: Consultant ranges include estimates of recognized market consultants.
Appendix
Q1 | January 2022 EY Price Point: global oil and gas market outlook
Page 17
TTF gas price estimates
This data is effective as of 10 December 2021.
Source: Bloomberg; banks/brokers reports
* Where brokers have reported figures in US$/mcf, we have used a conversion ratio of 1.037 for mcf conversion to MMBtu.
**Certain price estimates included within the summary above may reflect real vs. nominal pricing as the bank/broker assumptions are not explicitly stated within Bloomberg or the respective reports.
Source: Consultants’ websites and reports
Bank/broker 2022 (US$/MMBtu) 2023 (US$/MMBtu) 2024 (US$/MMBtu) 2025 (US$/MMBtu) 2026 (US$/MMBtu)
High 14.8 11.5 7.5
Average 13.4 10.0 7.5
Median 13.4 10.0 7.5
Low 11.9 8.5 7.5
Consultant 2022 (US$/MMBtu) 2023 (US$/MMBtu) 2024 (US$/MMBtu) 2025 (US$/MMBtu) 2026 (US$/MMBtu)
High 20.2 12.1 9.1 8.2 8.4
Average 16.0 10.6 8.2 7.8 7.1
Median 16.7 11.0 8.0 7.9 7.6
Low 10.6 8.4 7.3 7.5 5.5
Note: Consultant ranges include estimates of recognized market consultants.
Key contacts
Q1 | January 2022 EY Price Point: global oil and gas market outlook
Page 18
Important notice
Price outlook data included in this publication is effective as of 10 December 2021. Given the rapidly evolving nature of
the market and views of market participants, analysis can quickly become outdated. It should be noted that EY analysis
is not for the purpose of providing an independent view of the outlook for oil and gas prices. Instead, we are collating
the views of market participants.
Price outlook data should not be applied mechanistically. Instead, careful consideration should be given to the purpose
of any value assessment, with price forecasts assessed in the context of other key assumptions, such as resources and
reserves classification, production rates, discount rates, and cost escalation rates together with an appreciation of the
key sensitivities in any such analysis.
Gary Donald
EY Global Oil & Gas
Assurance Leader
+44 20 7951 7518
Derek Leith
EY Global Oil & Gas
Tax Leader
+44 1224 653 246
Andy Brogan
EY Global Oil & Gas
Leader
+44 20 7951 7009
David Johnston
EY US West Strategy &
Transactions Energy Leader
+1 713 750 1527
Gaurav Ghoge
EY Global Oil & Gas
Strategy Execution Leader
+ 1 713 750 4890
EY | Building a better working world
EY exists to build a better working world, helping create long-term value for
clients, people and society and build trust in the capital markets.
Enabled by data and technology, diverse EY teams in over 150 countries
provide trust through assurance and help clients grow, transform and
operate.
Working across assurance, consulting, law, strategy, tax and transactions, EY
teams ask better questions to find new answers for the complex issues facing
our world today.
EY refers to the global organization, and may refer to one or more, of the
member firms of Ernst & Young Global Limited, each of which is a separate
legal entity. Ernst & Young Global Limited, a UK company limited by
guarantee, does not provide services to clients. Information about how EY
collects and uses personal data and a description of the rights individuals
have under data protection legislation are available via ey.com/privacy. EY
member firms do not practice law where prohibited by local laws. For more
information about our organization, please visit ey.com.
How EY’s Global Oil & Gas team can help you
As changing demand and pricing volatility transforms the oil and gas industry,
companies must reshape to thrive in this new energy world. But how do you
balance the immediate cost and regulatory pressures of “now” with
investment in what comes “next?” EY’s Global Oil & Gas team brings together
the breadth of experience and talent needed to approach the entire
transformation process. By considering four key pillars of change — structure
and culture, customers, technology, and skills and capabilities — we can help
you adapt for today and reap the opportunities of tomorrow. And together we
can build a better working world.
© 2022 EYGM Limited.
All Rights Reserved.
EYG no. 011148-21Gbl
ED None
This material has been prepared for general informational purposes only and is not intended to be relied
upon as accounting, tax, legal or other professional advice. Please refer to your advisors for specific
advice.
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EY Price Point: global oil and gas market outlook

  • 1. EY Price Point: global oil and gas market outlook Q1 | January 2022
  • 2. Q4 in review Gary Donald EY Global Oil & Gas Assurance Leader gdonald@uk.ey.com Andy Brogan EY Global Oil & Gas Leader abrogan@uk.ey.com Q1 | January 2022 EY Price Point: global oil and gas market outlook Page 2 As the last quarter of the second pandemic year draws to a close, we continue to see heightened contrast between the medical and economic points of view. While COVID-19 cases are close to their all-time highs, so are equity prices, and a leading investment bank declared (on 2 December, 2021 after the Omicron outbreak in South Africa) that it was “optimistic about the possibility of a vibrant 2022.” When news of the variant hit in late November, the markets were rocked by the prospect of yet another round of local mobility restrictions and an interrupted return to normal international travel patterns, on top of the Biden Administration’s announced release of 50 million barrels of crude from the US Strategic Petroleum Reserve. So far though, with OPEC standing by its planned gradual return to normal production, oil prices have stabilized, albeit below where they were in mid-November. Henry Hub prices, always at the mercy of the weather, responded predictably to a warmer-than-normal early winter in the US, falling from US$6.60/MMBtu in early October to below US$4.00/MMBtu by mid-December. In Europe and Asia, following a short reprieve at the start of the quarter, piped natural gas prices have spiked again on concerns triggered by Russian troop buildups on the Ukraine border and uncertainties surrounding the Nordstream 2 pipeline. Looking forward, OPEC and the U.S. Energy Information Administration (EIA) in their last forecasts of the year both projected that 2022 oil demand would be above what we saw in 2019. Although time will tell if those forecasts are realized and other events could intervene, the response to new virus outbreaks is well-practiced and the trade-off between public health and economic reality has tipped toward a cautiously optimistic view.
  • 3. • What will the impact of the Omicron variant be on governments, central banks, consumers and companies? • Will monetary restraint impact economic growth and energy demand? • When will the long-standing connection between economic growth and oil demand start to break down? • How will supplies needed to meet growing oil and gas demand be funded? Q1 theme Q1 | January 2022 EY Price Point: global oil and gas market outlook Page 3 The theme for Q1 is divergence. Oil and gas markets moved downward during the quarter, but for completely different reasons, while LNG markets were unfazed by the emergence of the Omicron variant or the possibility of tightening by central banks to control inflation. Doubts about the long-term future of petroleum are at odds with the economics of oil and gas in the here and now and widely accepted projections of global demand. The Organization for Economic Cooperation and Development (OECD) Economic Outlook, published in December, shows “strong but imbalanced” growth with inflation subsiding but settling at rates higher than they were before the COVID-19 pandemic. The connection between economic growth and oil demand is well- established, and the most recent U.S. EIA International Energy Outlook calls for demand growth just below 1% for as far as the eye can see. The macroeconomic environment is always a risk, and the tapering of the central bank COVID-19 stimulus in response to inflation is inevitable. The most recent measure of consumer prices in the US showed increases at rates not seen since the early 1980s, and Eurozone inflation is currently running at its highest point in the history of the euro. Economic growth and predictions of continued oil demand growth mean positive medium- and long-term fundamentals for oil, gas and LNG, notwithstanding conventional wisdom about the future of petroleum. IOC financial results in Q3 were strong, and equity prices increased at double the rate of the broader market. In spite of this, the funding for upstream oil and LNG projects is still difficult to pinpoint. Consensus capital spending estimates for oil and gas majors for 2022 are 21% higher than 2021, but just over half of what they were in 2014.
  • 4. Q1 trends EY Price Point: global oil and gas market outlook Page 4 Q1 | January 2022 OPEC dominance clear Market resilient despite multiple shocks Henry Hub and LNG take different paths IOC investment to grow marginally Warmer-than normal weather in the US combined with recovering production interrupted the rally in Henry Hub prices, while uncertain Russian supplies and stressed infrastructure drove prices in Europe to record levels. OPEC’s ability to influence the supply and demand balance was openly questioned during previous oversupply episodes. Recovery from the 2020 crisis has been entirely OPEC-led and given us valuable clues for how the market might be managed as energy transition pressures oil demand. The 2014-2015 downturn was a turning point for IOC capital spending. The pandemic gave the industry another reason to hold the line on investment, and 2022 projections show only small increases. Since April 2020, oil prices have increased by a factor of 5 and gone up in 14 of the last 19 months. This steady, consistent rebound has occurred in the face of unprecedented political, social and economic turmoil.
  • 5. Q1 | January 2022 EY Price Point: global oil and gas market outlook Page 5 Market fundamentals • Oil markets continued to be undersupplied in the fourth quarter. Global oil demand grew 2% from the previous quarter, while OPEC, North American producers and others increased their production. • Global oil demand increased during the start of the quarter due to robust gasoline consumption and easing international travel restrictions. As has been the case for the past two years, COVID-19 hangs over the marketplace, and the recent pause in market recovery was a direct result of the emergence of a new variant. The IEA, EIA and OPEC have lowered their demand projections for the rest of 2021 and early 2022. Those agencies expect global oil demand to expand by 3.3 million barrels per day (mmb/d), 3.5 mmb/d and 4.2mmb/d, respectively, in 2022. • Supply uncertainty continues as well. OPEC+ has been remarkably disciplined in restoring output to pre-pandemic levels in step with demand, but analysts forecasted production could outpace demand. As this upward trend extends into 2022, the US, Canada and Brazil look set to pump at their highest-ever annual levels, lifting overall non-OPEC+ output by 1.8 mmb/d in 2022. Source: U.S. EIA Supply expected to outpace demand • LNG and natural gas markets have recently moved in opposite directions. After reaching US$6.32/MMBtu, at the beginning of the quarter, Henry Hub futures have fallen to US$3.75MMBtu while the international natural gas spot prices including JKM and Dutch TTF rose strongly at 2% and 8%, respectively, during the same period. European LNG prices reached US$42/MMBtu, which was the highest in four years. • Natural gas prices are always strongly influenced by the weather. On a weighted- average basis, heating degree days in the US are 14% below normal. Historically, that translates to a roughly 7 Bcf/day reduction in natural gas demand from a base of about 100 Bcf/day. Production continues to come back from its pandemic lows. Output at the end of Q3 was 4 Bcf/day higher than in Q3 2020, which was 5 Bcf/day lower than Q3 2019. • European prices have skyrocketed after a brief reprieve. A colder-than-expected winter, low inventory, tight Russian supplies and the recent escalated tensions between Ukraine and Russia have conspired to keep traders nervous and prices high. LNG and Henry Hub prices move in opposite directions Source: Refinitiv Movement to oversupply Movement to undersupply 3 5 7 20 30 40 50 10/1/2021 10/15/2021 10/29/2021 11/12/2021 11/26/2021 12/10/2021 Henry Hub LNG LNG prices vs. Henry Hub prices (US$/MMBtu) NYMEX JKM swaps front month NBP front month TTF front month Henry Hub front month
  • 6. Q1 | January 2022 EY Price Point: global oil and gas market outlook Page 6 Market fundamentals OPEC+ in charge • The pandemic has reinforced our views on the influence OPEC+ has on the global oil markets. The oil market recovered from the initial shock of COVID-19 because of OPEC+ production discipline. Between January and April 2020, OPEC+ countries cut production by 19%, with Saudi Arabia alone curtailing its output by 500 thousand barrels, while non-OPEC production fell by only 9% during the same period. This supported the oil prices to climb almost without interruption since mid-2020. • At its most recent Ministerial Meeting, OPEC+ agreed to hold to its previous plan to increase production by 400 thousand barrels/day. The decision came amid the emergence of a new COVID-19 variant and its potential to impact oil demand with renewed travel restrictions. However, the cartel remains optimistic about the demand growth but is also flexible to swiftly adjust production in the future. • Going forward, as the structural demand comes in and the focus on decarbonization accelerates, OPEC oil is likely to have a competitive advantage due to its low cost and low carbon intensity. This would further give OPEC a larger market share and even more influence on prices. Source: OPEC Monthly Oil Market Report and U.S. EIA Source: U.S. EIA • In November, the US Government announced a decision to release 50 million barrels from its Strategic Petroleum Reserve (SPR) with the intention of lowering gasoline prices for American consumers. The US coordinated this release with five other countries (including four Asian countries), as OPEC rebuffed requests to increase production. The volume of the US release was the largest in its history and unconventional as this was the first time the SPR was tapped in order to control prices. • In the wake of the announcement on 23 November, crude oil prices increased. The release had been telegraphed for some time, and January WTI futures had declined seven percent in the two weeks prior. Three days following the announcement, WTI prices fell over $10/bbl when the first wave of Omicron variant cases were reported in South Africa, making the move moot for the moment. • Analysts are skeptical that the move will have any sustained or significant impact on the markets. The volumes, while large in absolute terms, are relatively small when spread out over a meaningful horizon and compared to the potential for OPEC+ members to offset it with output cuts or foregone output increases. US and others release strategic reserves 0 20 40 60 80 20 25 30 35 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 US$/barrel Million barrels per day OPEC crude oil production and oil prices OPEC crude oil production Brent crude oil price 500 550 600 650 700 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Million barrels Ending stock of US Strategic Petroleum Reserve
  • 7. Q1 | January 2022 EY Price Point: global oil and gas market outlook Page 7 Market fundamentals IOC investment to remain muted in 2022 Source: Institute for Health Metrics and Evaluation (IHME), S&P Capital IQ • It has been almost two years since the start of the pandemic when crude oil prices dropped more than 75%. Since then, infections have grown in multiple waves as people have moved indoors and back out, restrictions have been imposed and relaxed, and vaccines have been rolled out. Prices have increased steadily, and in the 19 months since oil markets bottomed out (and went negative), the price of WTI crude has ended the month higher than it began in 2015. • Resilience in the economy generally and in commodity and equity markets specifically can be explained in two ways. The first is OPEC’s track record managing supply and the market’s confidence that it will step in as necessary. The second is that people and government have adapted to an environment in which COVID-19 risks are ubiquitous. Companies have created new ways of working, people have grown restless and appear comfortable with the risk of illness, and governments are reluctant to intervene and, in many cases, encourage citizens to resist or ignore restrictions. • The actual end of the pandemic is nowhere in sight and might never come. Notwithstanding, we should expect whatever market reactions occur to be transitory. Markets show resilience • Capital expenditures by IOCs* are less than half of what they were almost a decade ago. In 2012, companies invested US$176 billion but only US$81 billion in 2021. The crude oil price crash of 2014 triggered IOCs to focus on capital discipline, an ethic that was reinforced by the 2020 COVID-19 pandemic-driven oil price crash. • Although crude oil prices have now recovered from the pandemic lows, capital and production discipline continues. In 2022, IOC capital expenditures are projected to grow by 21% year over year to US$98 billion, nearly 15% lower than the pre-pandemic 2019 capital expenditures of US$114 billion. The tepid recovery in spending can no doubt be attributed to company and shareholder resistance to grow an asset base that is commonly believed to be reaching a sunset stage. • IOCs will continue to invest in their core oil and gas businesses. Although their overall hydrocarbon investment will largely remain flat in 2022, IOCs plan to ramp up spending in short-cycle resources to accelerate cash flow generation. With growing shareholder pressure to reduce emissions, IOCs are increasingly exploring biofuels, carbon capture and storage, hydrogen and programs to reduce operational emissions. *IOCs include: BP, Chevron, ConocoPhillips, ENI, Equinor, ExxonMobil, Shell and Total Source: S&P Capital IQ 0 20 40 60 80 0 200 400 600 800 Feb-20 May-20 Aug-20 Nov-20 Feb-21 May-21 Aug-21 Nov-21 US$ per barrel 000s Confirmed COVID-19 infections vs. crude oil prices (WTI) Daily confirmed cases (000s) Crude oil (US$ per barrel) 0 50 100 150 200 250 2012 2014 2016 2018 2020 2022 Billion US$ IOC capital expenditure
  • 8. Brent futures Q1 | January 2022 Page 8 Brent futures have increased slightly given global COVID-19 vaccination programs, increased mobility and the continued supply discipline of OPEC+. Going forward, there will be continued scrutiny on the emergence of new COVID-19 variants, OPEC+ supply discipline, decarbonization and capital allocation that will continue to impact medium- to long-term oil demand and pricing. Futures data is effective as of 10 December 2021. Source: Bloomberg EY Price Point: global oil and gas market outlook 10 20 30 40 50 60 70 80 90 US$/bbl Historical Brent Brent futures - December 2021 Brent futures - September 2021
  • 9. Q1 | January 2022 Page 9 Oil price outlook For WTI, banks and brokers (on average) forecast a wider range of oil prices throughout the forecast period. Forecasts for Brent are generally consistent throughout the forecast period. Consultants focus primarily on the analysis of a long-term sustainable oil price, whereas banks and brokers balance their views on the basis of current market conditions. Consultant ranges include estimates of recognized market consultants. Where consultant estimates are updated only annually (for example, the EIA and the IEA), such estimates are included within the range of estimates from 2024 onward (or combined with short-term estimates published by the same consultant) to prevent near-term ranges being impacted by estimates that are not considered to reflect current market dynamics. Brent price estimates derived under the IEA’s “Stated Policies” and “Sustainable Development” scenarios (inflation-adjusted to reflect nominal pricing) are reflected within the consultant ranges from 2024 onward. This data is effective as of 10 December 2021. EY Price Point: global oil and gas market outlook Note: The wide range of long-term price estimates reflects the degree of uncertainty within the market. Both the lower and upper ends of the range provided are supported by the estimates of credible market participants. Given the width of the range, the average of estimates should be used as a starting point for the assessment or generation of estimates. Brent: Average price per bbl forecast in 2026 — consultants Brent Bank/broker and consultant price estimates, ranges and averages WTI Bank/broker and consultant price estimates, ranges and averages Source: Bloomberg; bank/broker reports; consultants’ websites and reports US$69.4 WTI: US$65.5 Average price per bbl forecast in 2026 — consultants 50 60 70 80 90 2022 2023 2024 2025 2026 US$ per barrel Bank/broker range Consultants range Bank/broker average Consultants average 45 55 65 75 85 2022 2023 2024 2025 2026 US$ per barrel Bank/broker range Consultants range Bank/broker average Consultants average
  • 10. Q1 | January 2022 Page 10 Gas price outlook For Henry Hub, banks and brokers (on average) forecast a wider range of oil prices throughout the forecast period. Consultant forecasts for NBP are generally wider in the short term and narrower in the long term. Consultants focus primarily on the analysis of a long-term sustainable gas price, whereas banks and brokers balance their views on the basis of current market conditions. Consultant ranges include estimates of recognized market consultants. Where consultant estimates are updated only annually (for example, the EIA and the IEA), such estimates are included within the range of estimates from 2024 onward (or combined with short-term estimates published by the same consultant) to prevent near-term ranges being impacted by estimates that are not considered to reflect current market dynamics. Henry Hub price estimates derived under the IEA’s “Stated Policies” and ”Sustainable Development” scenarios (inflation- adjusted to reflect nominal pricing) are reflected within the consultant ranges from 2024 onward. NBP price estimates are scarce, with only six and three forecasts released by banks and brokers and consultants, respectively. This data is effective as of 10 December 2021. EY Price Point: global oil and gas market outlook Note: The wide range of long-term price estimates reflects the degree of uncertainty within the market. Both the lower and upper ends of the range provided are supported by the estimates of credible market participants. Given the width of the range, the average of estimates should be used as a starting point for the assessment or generation of estimates. *NBP: National Balancing Point Henry Hub: Average price per MMBtu forecast in 2026 — consultants UK NBP: Average price per therm forecast in 2026 — consultants Henry Hub Bank/broker and consultant price estimates, ranges and averages UK NBP Bank/broker and consultant price estimates, ranges and averages US$3.2 GBp55.5 Source: Bloomberg; bank/broker reports; consultants’ websites and reports 2.0 2.5 3.0 3.5 4.0 4.5 5.0 2022 2023 2024 2025 2026 US$ per MMBtu Bank/broker range Consultants range Bank/broker average Consultants average 40 60 80 100 120 140 160 2022 2023 2024 2025 2026 GBp per therm Bank/broker range Consultants range Bank/broker average Consultants average
  • 11. Q1 | January 2022 Page 11 Gas price outlook For both benchmarks, consultants (on average) forecast a wider range of prices throughout the forecast period. Consultants focus primarily on the analysis of a long-term sustainable gas price, whereas banks and brokers balance their views on the basis of current market conditions. Consultant ranges include estimates of recognized market consultants. JKM price estimates are scarce, with only two and two forecasts released for banks and brokers and consultants, respectively. TTF price estimates are scarce, with only two and four forecasts released by banks and brokers and consultants, respectively. This data is effective as of 10 December 2021. EY Price Point: global oil and gas market outlook Note: The wide range of long-term price estimates reflects the degree of uncertainty within the market. Both the lower and upper ends of the range provided are supported by the estimates of credible market participants. Given the width of the range, the average of estimates should be used as a starting point for the assessment or generation of estimates. JKM: Average price per MMBtu forecast in 2026 — consultants TTF: Average price per MMBtu forecast in 2026 — consultants JKM Bank/broker and consultant price estimates, ranges and averages TTF Bank/broker and consultant price estimates, ranges and averages US$7.5 US$7.1 Source: Bloomberg; bank/broker reports; consultants’ websites and reports 5 10 15 20 2022 2023 2024 2025 2026 US$ per MMBtu Bank/broker range Consultants range Bank/broker average Consultants average 5 10 15 20 2022 2023 2024 2025 2026 US$ per MMBtu Bank/broker range Consultants range Bank/broker average Consultants average
  • 12. Appendix Q1 | January 2022 EY Price Point: global oil and gas market outlook Page 12 Brent oil price estimates This data is effective as of 10 December 2021. Source: Bloomberg; bank/broker reports *Certain price estimates included within the summary above may reflect real vs. nominal pricing as the bank/broker assumptions are not explicitly stated within Bloomberg or the respective reports. Source: Consultants’ websites and reports; Oxford Economics Bank/broker 2022 (US$/bbl) 2023 (US$/bbl) 2024 (US$/bbl) 2025 (US$/bbl) 2026 (US$/bbl) High 79.1 75.0 75.0 76.3 Average 72.3 67.6 67.3 67.2 Median 72.0 67.4 67.3 67.1 Low 64.0 57.5 60.0 57.0 Consultant 2022 (US$/bbl) 2023 (US$/bbl) 2024 (US$/bbl) 2025 (US$/bbl) 2026 (US$/bbl) High 78.2 72.5 75.7 79.4 81.0 Average 73.7 67.2 67.1 68.1 69.4 Median 72.5 69.4 67.7 67.4 68.7 Low 70.1 54.9 58.3 60.9 60.9 Note: Consultant ranges include estimates of recognized market consultants. Where consultant estimates are updated only annually (for example, the EIA and the IEA), such estimates are included within the range of estimates from 2024 onward (or combined with short-term estimates published by the same consultant) to prevent near-term ranges being impacted by estimates that are not considered to reflect current market dynamics. Price estimates derived under the IEA’s “Stated Policies” and “Sustainable Development” scenarios (inflation-adjusted to reflect nominal pricing) are reflected within the consultant ranges from 2024 onward.
  • 13. Appendix Q1 | January 2022 EY Price Point: global oil and gas market outlook Page 13 WTI oil price estimates This data is effective as of 10 December 2021. Bank/broker 2022 (US$/bbl) 2023 (US$/bbl) 2024 (US$/bbl) 2025 (US$/bbl) 2026 (US$/bbl) High 71.2 69.0 66.0 66.0 Average 67.4 62.0 59.5 59.2 Median 67.5 60.8 58.0 59.0 Low 61.0 55.5 56.0 52.5 Source: Bloomberg; banks/brokers reports *Certain price estimates included within the summary above may reflect real vs. nominal pricing as the bank/broker assumptions are not explicitly stated within Bloomberg or the respective reports. Consultant 2022 (US$/bbl) 2023 (US$/bbl) 2024 (US$/bbl) 2025 (US$/bbl) 2026 (US$/bbl) High 75.3 70.0 72.4 75.4 76.9 Average 69.7 63.5 63.5 64.4 65.5 Median 70.0 66.3 64.8 64.7 66.0 Low 62.3 53.1 52.5 53.6 55.1 Source: Consultants’ websites and reports; Oxford Economics; EY analysis Note: Consultant ranges include estimates of recognized market consultants. Where consultant estimates are updated only annually (for example, the EIA), such estimates are included within the range of estimates from 2024 onward (or combined with short-term estimates published by the same consultant) to prevent near-term ranges being impacted by estimates that are not considered to reflect current market dynamics.
  • 14. Appendix Q1 | January 2022 EY Price Point: global oil and gas market outlook Page 14 Henry Hub gas price estimates This data is effective as of 10 December 2021. Source: Bloomberg; banks/brokers reports * Where brokers have reported figures in US$/mcf, we have used a conversion ratio of 1.037 for mcf conversion to MMBtu. **Certain price estimates included within the summary above may reflect real vs. nominal pricing as the bank/broker assumptions are not explicitly stated within Bloomberg or the respective reports. Source: Consultants’ websites and reports; Oxford Economics Bank/broker 2022 (US$/MMBtu) 2023 (US$/MMBtu) 2024 (US$/MMBtu) 2025 (US$/MMBtu) 2026 (US$/MMBtu) High 4.4 4.1 4.0 3.7 Average 4.0 3.4 3.4 3.2 Median 4.0 3.4 3.3 3.0 Low 3.8 3.0 3.0 2.8 Consultant 2022 (US$/MMBtu) 2023 (US$/MMBtu) 2024 (US$/MMBtu) 2025 (US$/MMBtu) 2026 (US$/MMBtu) High 4.5 4.1 4.1 4.2 4.3 Average 4.2 3.4 3.0 3.1 3.2 Median 4.3 3.3 3.0 3.1 3.2 Low 3.9 3.0 2.1 2.1 2.1 Note: Consultant ranges include estimates of recognized market consultants. Where consultant estimates are updated only annually (for example, the EIA and the IEA), such estimates are included within the range of estimates from 2024 onward (or combined with short-term estimates published by the same consultant) to prevent near-term ranges being impacted by estimates that are not considered to reflect current market dynamics. Price estimates derived under the IEA’s “Stated Policies” and “Sustainable Development” scenarios (inflation-adjusted to reflect nominal pricing) are reflected within the consultant ranges from 2024 onward.
  • 15. Appendix Q1 | January 2022 EY Price Point: global oil and gas market outlook Page 15 NBP gas price estimates This data is effective as of 10 December 2021. Bank/broker 2022 (£/therm) 2023 (£/therm) 2024 (£/therm) 2025 (£/therm) 2026 (£/therm) High 129.8 91.3 89.0 90.0 Average 109.2 71.7 64.0 72.5 Median 108.1 70.0 57.5 72.5 Low 88.0 58.0 52.0 55.0 Consultant 2022 (£/therm) 2023 (£/therm) 2024 (£/therm) 2025 (£/therm) 2026 (£/therm) High 150.0 90.0 60.0 61.2 62.4 Average 109.1 66.7 54.0 54.7 55.5 Median 115.0 60.1 51.8 52.3 53.1 Low 62.2 50.0 50.3 50.5 50.9 Source: Bloomberg; banks/brokers reports * Where brokers have reported figures in US$/mcf, we have used a conversion ratio of 1.037 for mcf conversion to MMBtu and the brokers’ forecasted FX rates. **Certain price estimates included within the summary above may reflect real vs. nominal pricing as the bank and broker assumptions are not explicitly stated within Bloomberg or the respective reports. Source: Consultants’ websites and reports; Oxford Economics *Where consultants have reported figures in US$/MMBtu, we have used the particular consultants' forecast FX rate for the purpose of our conversion. Note: Consultant ranges include estimates of recognized market consultants. Where consultant estimates are updated only annually, such estimates are included within the range of estimates from 2024 onward (or combined with short- term estimates published by the same consultant) to prevent near-term ranges being impacted by estimates that are not considered to reflect current market dynamics.
  • 16. Appendix Q1 | January 2022 EY Price Point: global oil and gas market outlook Page 16 JKM gas price estimates This data is effective as of 10 December 2021. Source: Bloomberg; banks/brokers reports * Where brokers have reported figures in US$/mcf, we have used a conversion ratio of 1.037 for mcf conversion to MMBtu. **Certain price estimates included within the summary above may reflect real vs. nominal pricing as the bank/broker assumptions are not explicitly stated within Bloomberg or the respective reports. Source: Consultants’ websites and reports Bank/broker 2022 (US$/MMBtu) 2023 (US$/MMBtu) 2024 (US$/MMBtu) 2025 (US$/MMBtu) 2026 (US$/MMBtu) High 16.0 12.0 10.2 10.1 Average 14.9 10.8 9.3 10.1 Median 14.9 10.8 9.3 10.1 Low 13.8 9.5 8.5 10.1 Consultant 2022 (US$/MMBtu) 2023 (US$/MMBtu) 2024 (US$/MMBtu) 2025 (US$/MMBtu) 2026 (US$/MMBtu) High 16.8 12.1 10.6 9.1 8.1 Average 16.6 10.5 9.2 8.5 7.5 Median 16.6 10.5 9.2 8.5 7.5 Low 16.4 8.9 7.8 8.0 7.0 Note: Consultant ranges include estimates of recognized market consultants.
  • 17. Appendix Q1 | January 2022 EY Price Point: global oil and gas market outlook Page 17 TTF gas price estimates This data is effective as of 10 December 2021. Source: Bloomberg; banks/brokers reports * Where brokers have reported figures in US$/mcf, we have used a conversion ratio of 1.037 for mcf conversion to MMBtu. **Certain price estimates included within the summary above may reflect real vs. nominal pricing as the bank/broker assumptions are not explicitly stated within Bloomberg or the respective reports. Source: Consultants’ websites and reports Bank/broker 2022 (US$/MMBtu) 2023 (US$/MMBtu) 2024 (US$/MMBtu) 2025 (US$/MMBtu) 2026 (US$/MMBtu) High 14.8 11.5 7.5 Average 13.4 10.0 7.5 Median 13.4 10.0 7.5 Low 11.9 8.5 7.5 Consultant 2022 (US$/MMBtu) 2023 (US$/MMBtu) 2024 (US$/MMBtu) 2025 (US$/MMBtu) 2026 (US$/MMBtu) High 20.2 12.1 9.1 8.2 8.4 Average 16.0 10.6 8.2 7.8 7.1 Median 16.7 11.0 8.0 7.9 7.6 Low 10.6 8.4 7.3 7.5 5.5 Note: Consultant ranges include estimates of recognized market consultants.
  • 18. Key contacts Q1 | January 2022 EY Price Point: global oil and gas market outlook Page 18 Important notice Price outlook data included in this publication is effective as of 10 December 2021. Given the rapidly evolving nature of the market and views of market participants, analysis can quickly become outdated. It should be noted that EY analysis is not for the purpose of providing an independent view of the outlook for oil and gas prices. Instead, we are collating the views of market participants. Price outlook data should not be applied mechanistically. Instead, careful consideration should be given to the purpose of any value assessment, with price forecasts assessed in the context of other key assumptions, such as resources and reserves classification, production rates, discount rates, and cost escalation rates together with an appreciation of the key sensitivities in any such analysis. Gary Donald EY Global Oil & Gas Assurance Leader +44 20 7951 7518 Derek Leith EY Global Oil & Gas Tax Leader +44 1224 653 246 Andy Brogan EY Global Oil & Gas Leader +44 20 7951 7009 David Johnston EY US West Strategy & Transactions Energy Leader +1 713 750 1527 Gaurav Ghoge EY Global Oil & Gas Strategy Execution Leader + 1 713 750 4890
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