Study Group 3: Newly emerging gas markets: Middle-East, South-East Asia and Latin America

October 14, 2015

PGCC_Group 3

Scope of the study

• Identifying the gas use potential in emerging countries and the growth and development opportunities taking into account the different stages of development for each country ;

• Analyzing gas’ competitiveness in these countries with regard to other energy sources, in connection with parameters, such as price, environment, distance …etc. ;

• Identifying the new issues and challenges in the development of emerging markets and their growth ;

• Examining the potential impact of the development of these markets on the global natural gas market.

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PGCC Group-3 Member

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As of Oct. 14th, 2015 at 1st meeting in Oran Algeria

Name organization country focused region

Ghalib Al Amri Oman LNG L.L.C. Oman Middle EastMohamed Lamine SAIDANI Sonatrach Algeria South East AsiaEric Vasco Snam Italy outh America

Shigeki Sakamoto Institute of Applied Energy Japan

• Definition of “Emerging market” for our study: Demand Potential

• Time spun for the study: ～2040 or 2045 for the longest (WEO by IEA)

• By next meeting in March 2016, conduct research mainly by using WEO2015

• Middle East – Oil-rich gas producers in the Gulf

– Saudi Arabia, Kuwait, UAE, Oman, Iraq

• South East Asia

– Current LNG producers ➞ should-be LNG importers

– Indonesia, Malaysia, (Thailand)

• South America – Emerging gas producer, major regional gas markets

– Brazil, Argentina, Chile

Focused markets for study (person responsible for the region to decide)

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• “Could regional gas production or a new source of gas supply displace LNG imports?”

• Increase of power demand – Improvement of living standards and development of industries are ongoing.

– Need for power is increasing

– Need for gas is increasing as fuel for generation.

• Gas shortage – Except for Qatar, most of the gulf oil producers lack enough gas production

for power generation.

– Gas selling price set by the governments is so low that it discourages E&P companies incentives for gas development.

Issues in Middle East Gas Market

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Gas Imports: Middle East

• Qatar has supplied UAE and Oman of gas by pipeline.

• Iran imports gas by pipeline from Turkmenistan, which is for regional

gas adjustment in north of Iran.

• Kuwait and Dubai has imported LNG, since

their domestic gas production is not enough. 6

0

5

10

15

20

25

30

35

40

2008 2009 2010 2011 2012 2013 2014

bcm PL Gas & LNG Imports: Middle East

Kuwait LNG

Dubai LNG

Iran PL

Oman PL

UAE PL

Source: BP statistics

Projects of Gas Development in Middle East

Several gas development projects have been planned. While some are proceeding, the others have been delayed.

Source: several data sources

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Saudi Arabia

Yemen

Iran Iraq

Oman

Sudan

Egypt

Syria

• Current LNG exporting region is changing into an LNG importing region.

• Gas demand for power generation and industries is increasing in developing economies in S.E. Asia: – Indonesia, Malaysia, Thailand, Vietnam

• Current major LNG exporters are becoming LNG importers due to increasing domestic gas demand: – Thailand, Malaysia and Indonesia have already started using LNG.

Issues in South East Asia

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LNG Liquefaction and Receiving terminals in South East Asia

LNG receiving terminals are increasing in traditional LNG exporting region of South East Asia: Thailand, Malaysia, Indonesia

Source: IEA WEO2014

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Receiving terminal Receiving (planned)

Liquefaction Liquefaction (planned)

LNG Imports: South East Asia

• First LNG import was in Thailand in 2011.

• Now 4 countries import LNG including LNG exporters, and imported volume has

increased.

– Indonesia uses domestic LNG; receives LNG at West Jawa, major market, from Tangguh,

Kalimantan.

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0

1

2

3

4

5

6

7

2011 2012 2013 2014

Million tons LNG Imports: South East Asia

Singapore

Indionesia

Malaysia

Thailand

Source: GLGNG

Change of LNG suppliers in the global market (2012 toward 2040 )

Increase of market share: Australia (10%→20%), Russia (5% →12%) New suppliers: North America (0%→14%), East Africa (0%→12%) Decrease of market share: Middle East (40% →25%) Declining suppliers: South East Asia (21% →0%)

Source: IEA WEO2014

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• Brazil is becoming a significant gas producer as well as an emerging oil producer. – Gas producing project by pipeline is progressing, which will supply gas in

Santos basin to the southern part of Brazil.

– Hydro electric plays a big role in power supply in Brazil. However, there is a big seasonality between dry and wet seasons. In dry season, Brazilian economy needs gas supply.

– How to deal with fluctuation of gas demand is a big issue.

• Increase of gas demand in the other markets – Argentina, Chile

Issues in Latin American Gas Market

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Gas Imports: Latin America

• Bolivia has been a major pipeline gas supplier in Latin America:

• Brazil and Argentina have been major PL gas importers.

• Latin America started LNG imports in 2008. Since then LNG imports have been

increased by Argentina, Brazil and Chile.

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0

5

10

15

20

25

30

35

40

2008 2009 2010 2011 2012 2013 2014

bcm PL Gas & LNG Imports: South America

Chile LNG

Brazil LNG

Argentina LNG

Venezuela PL

Uruguay PL

Chile PL

Brazil PL

Argentina PL

Source: BP statistics

Change of Energy Consumption: Brazil

• Hydro electric plays quite an important role in Brazil.

• However, there is a big seasonality between dry and wet seasons.

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0

50

100

150

200

250

300

350

2007 2008 2009 2010 2011 2012 2013 2014

Million tons oil equivalent

Brazil: Energy Consumption by Fuel

Renewables

Hydro electric

Nuclear Energy

Coal

Natural Gas

Oil

Source: BP statistics

Santos Basin gas development in Brazil

Petrobras plans to increase of process associated gas of oil fields in Santos basin by

constructing pipelines for gas supply to southern part of Brazil, which is expected to play a

significant role in gas supply.

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Pre-salt

Sao Paulo

Rio de Janeiro

Brazil