fatih birol

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An outlook for natural gas

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fatih birol

  1. 1. An outlook for natural gas Fatih Birol IEA Chief Economist 22 January 2013 © OECD/IEA 2013
  2. 2. The context  Foundations of global natural gas markets are shifting  Advances in technology have led to a surge in unconventional gas supply in North America  Strong divergence in regional gas market conditions & prices  Many countries are lining up to emulate North America’s success; notably in China, Australia, Latin America & parts of Europe  But concerns remain that production might involve unacceptable environmental & social damage  Major implications for local communities, land use & water resource  Serious hazards include the potential for air & water pollution  Improperly addressed, these concerns could hold back, & perhaps halt, the unconventional gas revolution© OECD/IEA 2013
  3. 3. De-coupling of regional gas prices 20 $2012/MBtu 18 16 Japan (LNG import) 14 12 10 Europe (German import) 8 6 4 US (Henry Hub) 2 0 1991 1994 1997 2000 2003 2006 2009 2012 At its lowest level in 2012, natural gas in the United States traded at around one-fifth of import prices in Europe & one-eighth of those in Japan© OECD/IEA 2013
  4. 4. Canada following the unconventional path Canadian oil & gas production 10 mboe/d Unconventional gas Conventional gas 5 Unconventional oil Conventional oil 1980 1990 2000 2010 2020 2030 2035 Production from oil sands & from shale make Canada one of the pioneers of unconventional resource development© OECD/IEA 2013
  5. 5. A United States oil & gas transformation US oil & gas production mboe/d 25 20 Unconventional gas 15 10 Conventional gas Unconventional oil 5 Conventional oil 1980 1990 2000 2010 2020 2030 2035 The surge in unconventional oil & gas production has implications well beyond the United States© OECD/IEA 2013
  6. 6. A changing power mix US electricity generation growth, 2006-2011 Natural gas Renewables Nuclear Oil Coal -300 -200 -100 0 100 200 300 TWh Over the past 5 years, natural gas & renewables were the main sources of growth in electricity generation in the United States, with implications for GHG emissions© OECD/IEA 2013
  7. 7. Growth in world coal demand, 2011 10% 8% 6% 4% 2% 0% -2% -4% -6% Japan United Russia Latin World Developing European States America Asia Union European Union coal demand rose by a historical 7% in 2011, benefitting from cheap US imports© OECD/IEA 2013
  8. 8. Different trends in oil & gas import dependency Net oil & gas import dependency in selected countries Japan Gas Imports 100% 2010 2035 80% European Union 60% 40% 20% China India United States 0% Gas Exports 20% 20% 40% 60% 80% 100% Oil imports Dependence on imported oil and gas rises in many countries, though the US swims against the tide© OECD/IEA 2013
  9. 9. The (gradual) spread of the unconventional revolution Unconventional gas production, 2035 United States Shale China Coalbed methane Canada Australia Tight India Russia Argentina Mexico Indonesia Algeria European Union 0 100 200 300 400 500 600 bcm Outside Canada & the United States, 80% of anticipated growth in unconventional gas production takes place after 2020© OECD/IEA 2013
  10. 10. Looking to the future, emerging economies will drive energy demand growth Share of global energy demand 6 030 Mtoe 12 380 Mtoe 16 730 Mtoe 100% Rest of non-OECD Non-OECD Middle East 80% India China 60% OECD 40% 20% 1975 2010 2035 Global energy demand rises by over one-third in the period to 2035, underpinned by rising living standards in China, India & the Middle East© OECD/IEA 2013
  11. 11. The power sector points to the diverse drivers for gas demand growth Change in power generation, 2010-2035 Coal Gas Nuclear Renewables China India United States European Union Japan -1 000 0 1 000 2 000 3 000 4 000 5 000 6 000 TWh TWh A mixture of factors leads to increased gas use: cheaper gas, nuclear phase-outs, a desire to diversify the fuel mix, and local and global environmental concerns© OECD/IEA 2013
  12. 12. The shifting balance of supply & demand points to a more globalised market Major global gas trade flows, 2010 2035 Rising supplies of unconventional gas & LNG help to diversify trade flows, putting pressure on conventional gas suppliers & oil-linked pricing mechanisms© OECD/IEA 2013
  13. 13. Conclusions  Factors on both the supply & demand side pushing gas towards a higher share in the global energy mix  Changing patterns of gas production & use have profound implications for global gas trade, with new connections between regional markets  Improperly addressed, social & environmental concerns could hold back the unconventional gas revolution  Natural gas has a role to play in moving us towards a low-carbon energy economy  IEA-led high-level forum can address key policy & regulatory issues for safe & sustainable gas development, building on the “Golden Rules”© OECD/IEA 2013

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