IEA Medium-Term Gas Market Report 2016 - Columbiaenergypolicy.columbia.edu/sites/default/files/MTGMR...
Transcript of IEA Medium-Term Gas Market Report 2016 - Columbiaenergypolicy.columbia.edu/sites/default/files/MTGMR...
© OECD/IEA 20161© OECD/IEA 2016
IEA Medium-Term Gas Market Report
2016
© OECD/IEA 20162
Growth in global gas demand slows
Growth in gas demand slows as it faces greater competition in the power sector; yet it is the only fossil fuel that does not suffer a decline in its share of the energy mix
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2009-15 2015-21
bcm
Change in world natural gas demand
Change in total gas demand
2.5 % 1.5 %
Change in per cent
© OECD/IEA 20163
China drives increase in global gas demand, as the United States takes a back seat
US gas demand growth slows sharply, driven by stagnation in the power sector;EU gas demand gradually recovers on coal & nuclear power plant retirements
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China Middle East United States India EU Korea andJapan
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Change in natural gas demand by region (bcm)
2009-15 2015-21
© OECD/IEA 20164
Growth in gas production is led by the United States and Australia
The United States & Australia rather than the more establishedexporters – Russia, Qatar & ASEAN – are the main source of production growth
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United States Australia Qatar China Russia ASEAN EU
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Change in natural gas production by region (bcm)
2009-15 2015-21
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US gas production stagnates in 2016 but a recovery is expected
Change in US gas production, 2011-2021 (bcm)
Low prices have impacted US gas production; but as market balances tighten & prices gradually recover, robust growth is set to resume
-80.00
-60.00
-40.00
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2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
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LTO associated gas Marcellus+Utica Others Total
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Greater competition is coming to the European gas market
US LNG is competitive in Europe
Oversupply in global LNG markets will intensify competition; flexible US LNG volumes are well-placed to compete in Europe
Nb: Based on cash costs and on forward curves as of June 7th 2016
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2013 2015 2017
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D/M
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European hub prices (TTF) Henry Hub indexed LNG delivered to Europe
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Global LNG export capacity increases sharply
LNG capacity additions will be led by the US & Australia over the next five years; projects in Canada & East Africa could also move ahead if demand & prices recover
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2009-15 2015-21
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Liquefaction capacity additions
Australia Qatar U.S. Others
© OECD/IEA 20168
As imports from Japan & Korea are set to decline, the rebalancing of global markets will depend on the rate of expansion in China & other developing Asia
Developing Asia emerges as key engine of LNG import growth
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2009-15 2015-21
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Change in LNG imports by region (bcm)
India China Other developing Asia EU Korea + Japan
© OECD/IEA 20169
86%
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Utilization rate
Liquefaction plants to run below capacity amid supply glut
Note: nameplate capacity has been adjusted to reflect outages, and feed-gas issues
Oversupply in the market will get worse before it gets better. This will put pressure for increased flexibility in contracts and a reduced linkage to oil.
© OECD/IEA 201610
Outages and feed gas issues: a growing problem
A growing level of LNG export capacity has gone offline over the past five years highlighting security and investment challenges across a host of producers
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Liquefaction capacity offline
Algeria Angola Egypt Yemen Other countries
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Investment in new LNG export capacity has ground to a halt
The collapse in investment increases the risk of tighter markets in the next decade; concerns about gas supply security could quickly re-emerge
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2011 2012 2013 2014 2015 2016 (to date)
bcm
Final investment decisions in liquefaction capacity by year
© OECD/IEA 201612
Conclusions
The gas landscape is changing: production growth is increasingly driven by the US & Australia; demand growth by developing Asia
Traditional exporters will come under pressure as competition from new supply sources intensifies
Global gas prices are set to stay under pressure as a huge amount of LNG export capacity is coming online just as demand slows
Lower prices have triggered a collapse in new investment. This could seed the sows for tighter markets into next decade.