Post on 07-May-2018
CEDIGAZ, the International Association for Natural Gas
Medium and Long Term Natural Gas Outlook 2017
CEDIGAZ, July 2017
SUMMARY
CEDIGAZ Reference Scenario: Main assumptions
Medium and Long Term Natural Gas Outlook 2017 2
Policy
• No 2°C target but INDCs are assumed to be achieved.
• Cedigaz Scenario brings about a trajectory of CO2 emissions from the energy sector that is consistent with INDCs.
• Only current policies and announced national energy plans are considered, although some elements of strategic energy plans are viewed with caution and not fully integrated.
• CEDIGAZ Scenario incorporates Europe’s 2030 Climate & Energy Package (40-27-27).
• As regards geopolitics, local conflicts have less negative influence on global energy markets in the long term.
Economy/demographics/pricing
• World economic growth of 3.5%/year over 2014-2035. Strong economic growth in the Middle East, Africa and India.
• Population growth of 0.9%/year (slight decrease in Russia and Japan, but high growths in Africa, the Middle East and India).
• Henry Hub price as a growing component for gas pricing in the long term.
• Globalization of gas markets via a strong expansion of the LNG trade (flexible LNG).
• Oil prices are expected to increase in the long term to reach $90/bbl by 2035.
• High CO2 price post-2020 (Europe, China).
Technology
• CEDIGAZ Scenario only considers technologies that are already in use at the current time or those that have been approved.
• Increasing technological progress, cost reductions of low-carbon technologies and continued improvements in energy efficiency.
• Policy initiatives stimulating the deployment of renewables.
• World energy intensity reduced by 40% over 2014-2035, with the largest decrease posted in China (-4%/year).
• Absence of any significant technological revolutions or breakthroughs. Decarbonisation is mostly occurring in the power sector.
� In order to frame its gas demand and supply prospects within a wider energy environment, CEDIGAZ has
made projections on global primary energy demand, which are based on assumptions on the evolution of
the world economy, population, policies and technology.
CEDIGAZ Reference Scenario: Main trends (2014 – 2035)
3
� China remains the largest growth market for energy but is overtaken by India at the end of the period.
� No energy demand growth in OECD Asia and a significant reduction in energy consumption in Europe.
� Virtually all the growth in world energy demand comes from fast-growing emerging economies.
� Emerging economies account for around 85% of gas demand growth.
� The main demand driver in these countries will be economic development.
%/year
Medium and Long Term Natural Gas Outlook 2017
-5
-3
-1
1
3
5
7
EU28 United
States
OECD Asia China India Other non-
OECD Asia
Middle East CIS Africa South &
Central
America
Energy intensity
Real GDP
Population
Energy demand
Natural gas demand
Prospects for energy consumption by
geographic zone and the role of natural gas
4
Unit: Mtoe
Medium and Long Term Natural Gas Outlook 2017
0
500
1000
1500
2000
2500
3000
3500
4000 Other fuels - 2035 Other fuels - 2014
Natural gas - 2035 Natural gas - 2014
0 1000 2000 3000 4000 5000
Oil
Gas
Coal
Bioenergy
Nuclear
Other renewables
Hydro
2014
Growth in 2014-2035
Prospects for the global energy mix
29%
31%
21%
5%
3%
10% 1%
Coal
Oil
Gas
Nuclear
Hydro
Bioenergy
Other renewables
24%
27%24%
6%
3%
11%5%
5
2014: 13.7 Gtoe 2035: 16.7 Gtoe
Renewables and natural gas are gaining share relative to coal and oil.
Medium and Long Term Natural Gas Outlook 2017
Prospects for energy balance by region
6
Unit: Mtoe
Coal
Oil
Gas
Nuclear
Hydro
Bioenergy
Other REN
Growth 2014-2035
Energy: + 1%/year
Gas: + 1.6%/year
Medium and Long Term Natural Gas Outlook 2017
0
500
1000
1500
2000
2500
3000
2014 2035
0
500
1000
2014 2035
0
500
1000
1500
2000
2014 2035
0
500
1000
1500
2014 2035
0
500
1000
1500
2014 2035
0
1000
2000
3000
4000
5000
6000
7000
8000
2014 2035
0
500
1000
2014 2035
Natural gas gains importance in the energy mix in most of markets
Natural gas demand prospects by region
7
Unit: Bcm
Medium and Long Term Natural Gas Outlook 2017
-20
180
380
580
780
980
1180
1380
2015 Growth 2015-2025 Growth 2025-20352015
Asia-
Oceania
19%
North
America
27%Middle
East
14%
CIS
17%
Europe
14%
South &
Central
America
5%
Africa
4%
Asia-
Oceania
26%
North
America
23%Middle
East
16%
CIS
14%
Europe
10%
South &
Central
America
6%
Africa
5%
2035
Natural gas production prospects by region
8
Bcm
North
America
26%
CIS
21%Middle East
19%
Asia-Oceania
17%
Africa
8%
South &
Central
America
5%
Europe
4%
2015
2035
Medium and Long Term Natural Gas Outlook 2017
0
200
400
600
800
1 000
1 200
2015 2025 2035
North America
27%
CIS
23%Middle East
17%
Asia-Oceania
15%
Africa
6%
South &
Central
America
5%
Europe
7%
Unconventional natural gas prospects
Medium and Long Term Natural Gas Outlook 2017 9
� The share of unconventional gas in total supply is expected to grow from 20% in 2014 to 33% in 2035.
Global production
� Unconventional gas provides 71% of supply growth, rising from 699 bcm in 2014 to 1587 bcm in 2035.
Bcm
� The bulk of projected unconventional gas production is in the form of shale gas.
Conventional
67%
Coal-to-Gas &
Biogas
1% CBM
4% Tight Gas
8%
North
America
16%
Asia-Oceania
2%
Other
2%
Shale gas
20%
Total 2035 = 4747 bcm
0%
5%
10%
15%
20%
25%
30%
35%
0
1000
2000
3000
4000
5000
2015 2025 2035
Conventional Coal-to-Gas & Biogas
Shale gas CBMTight Gas Methane hydrates
Share of unconventional (%)
Interregional flows by pipeline and LNG
2015 = 444 Bcm
2035 = 836 Bcm
Growth 2015-2035 World gas supply: + 1.5 %/year
Long-distance LNG trade: + 4.4%/year
Long-distance pipeline trade: + 2.1 %/year
Strategic role of LNG to meet growing external import needs of
Europe and Asia
10Medium and Long Term Natural Gas Outlook 2017
Pipeline
56%
LNG
44%
Pipeline
45%
LNG
55%
Prospects for the international LNG market
Medium and Long Term Natural Gas Outlook 2017 11
Delays in the second wave of LNG supply bring a risk of tighter markets in the 2020s.
LNG Supply Demand Gap
0
100
200
300
400
500
600
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
20
34
20
35
mm
tpa
North America
Middle East
South & Central America
Europe
C.I.S.
Asia/Oceania
Africa
World LNG Demand
Operational & under
construction capacities
Required additional
capacity
Prospects for global CO2 emissions
Medium and Long Term Natural Gas Outlook 2017 12
Comparison of scenarios in terms of CO2 emissions
� In CEDIGAZ Scenario, the growth of global emissions declines more strongly compared to other baseline
scenarios, but emissions remain well above the 2°C path despite the deployment of renewables and
efficiency, as well as coal to gas switching.
%/year
-2,5
-2
-1,5
-1
-0,5
0
0,5
1
1,5
CEDIGAZ
(2014-2035)
BP
(2015-2035)
IEA New Policies
(2014-2040)
ExxonMobil
(2015-2040)
IEA 450
(2014-2040)
Energy demand
Energy-related CO2 emssions
CONCLUSION
Medium and Long Term Natural Gas Outlook 2017 13
� Natural gas will actively expand its position in the global energy markets by 2035.
� Natural gas demand will pursue its short and medium-term growth trajectory to 2035 (+ 1.5%/year).
� The strong expansion of LNG supply will help gas to grow faster than oil and coal.
� The growing importance of LNG trade will accelerate the integration of natural gas markets and will
result in a closer linkage between international prices.
� The growth of natural gas will be backed by the abundance of economic conventional and
unconventional gas resources.
� Global peak demand for gas is not expected in the foreseeable future.
� Along with efficiency measures, the substitution from coal and oil to gas and renewables in a more
powered energy system is key to meet environmental challenges.
� Most countries have policies that should favor gas consumption over other hydrocarbon sources,
especially for the power sector.
� Even so, strong action is required in the short and medium term to promote coal-to-gas switching.
� The environmental advantages and flexibility of gas makes it a valuable component of a gradually
decarbonising energy and electricity system.
CEDIGAZ Publication
« Medium and Long Term Natural Gas Outlook 2017 »
is available online:
http://www.cedigaz.org/members/gas-market-analysis.aspx
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www.cedigaz.org
About CEDIGAZ
CEDIGAZ is an international association with around 80 members in 40 countries. Dedicated to natural gas
information, CEDIGAZ collects and analyses economic information on natural gas, LNG and unconventional gas in
an exhaustive and critical way. CEDIGAZ data has been the industry's reference since its foundation in 1961.
CEDIGAZ
CEDIGAZ, the International Association for Natural Gas