International perspectives on energy prices Ifiec Energy forum 2017

Transcription

1 International perspectives on energy prices Ifiec Energy forum 2017 Matthew Monteverde 31 May 2017 London Houston Singapore Moscow Dubai New York Portland Calgary Santiago Bogota Rio de Janeiro Beijing Shanghai Tokyo Sydney Astana Kiev Cape Town Riga San Francisco Washington Market Reporting Consulting Events

2 A brief review Market Reporting Consulting Events

3 /MWh Gas prices were higher 40 Front-month Dutch prices top 20/MWh during cold winter Okt 07 Aug 08 Jun 09 Apr 10 Feb 11 Dez 11 Okt 12 Aug 13 Jun 14 Apr 15 Feb 16 Dez 16 TTF

4 /MWh So were power prices 120 Front-month base load power prices highest since Okt 07 Aug 08 Jun 09 Apr 10 Feb 11 Dez 11 Okt 12 Aug 13 Jun 14 Apr 15 Feb 16 Dez 16 Germany

5 /MWh Especially in France 140 Front-month base load power prices highest since Okt 07 Aug 08 Jun 09 Apr 10 Feb 11 Dez 11 Okt 12 Aug 13 Jun 14 Apr 15 Feb 16 Dez 16 Germany France

6 Demand Market Reporting Consulting Events

7 Daily gas demand ( v ) Winter gas demand was higher 20% Winter demand year-on-year comparison 19% 15% 10% 11,2% 13,6% 11,6% 5% 0% 2,4% NL FR IT UK DE Full winter

8 Daily gas demand ( v ) Winter gas demand was higher 25% 20% 15% Winter demand year-on-year comparison 21,3% 16,7% 15,8% 19,8% 19,0% 10% 11,2% 13,6% 11,6% 6,4% 5% 0% 2,4% NL FR IT UK DE Dec-Feb Full winter

9 Frequency Germany temperatures since Average winter temperatures were fractionally above average C Historic

10 mn m³/d Power sector demand was relatively strong 250 European power-sector demand highest in years Okt 12 Okt 14 Okt 16 IT UK FR ES BE

11 Daily gas demand (mn m³/d) Demand was still lower than in similar years 400 Winter demand NL FR IT UK DE

12 Supply Market Reporting Consulting Events

13 mn m³/d Supply did not change much Composition of western European supply largely unchanged Jan 07 Jan 09 Jan 11 Jan 13 Jan 15 Jan 17 RU NL/UK production NO N.Africa LNG

14 Russia maintaining market share 100% Western European supply 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Jan 07 Jan 09 Jan 11 Jan 13 Jan 15 Jan 17 RU NL/UK production NO N.Africa LNG

15 Sendout (mn m³/d) LNG is still finding better places to be 400 Europe and selected other importers to end Jan 07 Jan 09 Jan 11 Jan 13 Jan 15 Europe Japan Middle East, Pakistan, Egypt Argentina, Brazil, Chile SE Asia Copyright 2015 Argus Media Ltd. All rights reserved.

16 Index (December 2014 = 100) Gas prices were higher 120 Front-month Dutch prices top 20/MWh during cold winter Dec 2014 Jun 2015 Dec 2015 Jun 2016 Dec 2016 TTF

17 Index (December 2014 = 100) But European gas rallied slower than others 120 European gas price rally lags behind other commodities Dec 2014 Jun 2015 Dec 2015 Jun 2016 Dec 2016 TTF LNG (spot Asia) Henry Hub Coal (ARA)

18 Index (December 2014 = 100) But European gas rallied slower than others 120 European gas price rally lags behind other commodities Dec 2014 Jun 2015 Dec 2015 Jun 2016 Dec 2016 TTF LNG (spot Asia) Henry Hub Coal (ARA) Crude (Brent) Gasoline (Eurobob)

19 Europe and global gas pricing Market Reporting Consulting Events

20 Annual average ($/mn Btu) European wholesale prices middle of the pack 12 Selected global gas prices TTF India spot LNG Japan LNG Japan oilindex ANEA spot Henry Hub Tetco M3 Algonquin EU oilindex China citygate China LNG Brazil LNG

21 The LNG market continues to grow Market Reporting Consulting Events

22 LNG trade flow 2006

23 LNG trade flow 2015

24 Nautical miles Australia and the US contribute new LNG production v 2015 Total +20mn t Australia US +2.3

25 Export growth by destination US LNG delivered to 13 countries. None received more than 540,000t 94pc of new volumes went to China, Japan and Korea 2016

26 Nautical miles Demand up from the newest importers imports v 2015 Total +8.7mn t Egypt +4.9 Brazil

27 Egypt Market Reporting Consulting Events

28 mn m³/d Egypt entering a second swing 180 Egyptian demand Demand

29 mn m³/d Egypt entering a second swing 180 Egyptian demand and power-sector consumption Demand Power sector

30 mn m³/d Egypt entering a second swing 200 Egyptian demand and production Demand Production

31 mn m³/d Egypt entering a second swing 200 Egyptian demand and production Export Import Demand Production

32 mn m³/d Egypt entering a second swing Egyptian demand and production New fields on the way West Nile Delta commissioning March 2017 plateau 34mn m³/d Zohr scheduled end mn m³/d in 4-5 months, 81mn m³/d by end 2018 Atoll 1 first-half mn m³/d Actual

33 mn m³/d Egypt entering a second swing 250 Egyptian demand and production Actual Projection Demand Production

34 Global reserves and domestic production Market Reporting Consulting Events

35 Europe the second-lowest reserve region

36 bn m³/yr European gas production in decline 350 European gas production (DK, DE, IT, NL, NO, PL, RO, UK) European gas production

37 The power sector in transition Market Reporting Consulting Events

38 TWh EU power generation EU power generation limited demand growth, renewables push Solid Fuels + waste Oil Gas Nuclear Renewables

39 TWh EU power generation EU power generation limited demand growth, renewables push Solid Fuels + waste Oil Gas Nuclear Renewables

40 TWh US power generation US power generation gas displaces coal, but renewables coming Solid Fuels + waste Oil Gas Nuclear Renewables

41 TWh US power generation US power generation gas displaces coal, but renewables coming Solid Fuels + waste Oil Gas Nuclear Renewables

42 Million MWh/yr US net power generation outlook US power generation of the future gas and renewables Nuclear Coal Gas Oil/products/pet coke Renewable

43 Retail renewables Market Reporting Consulting Events

44 Google Project Sunroof

45 Google Project Sunroof

46 Trump and coal Market Reporting Consulting Events

47 Trump and coal Executive order rolls back policy Lifts moratorium on leasing federal lands for coal mining potentially for more than 1bn short tonnes EPA order to re-evaluate CO2 rules Rescinds guidance on the use of the social cost of carbon estimate to help measure the effect of greenhouse gas emissions Reactions have been mixed, even in the industry US interior secretary: coal development is going to be market driven At the end of the day, coal will still have to compete with a host of other fuels, Cloud Peak Energy (NYT)

48 The struggling European utility sector Market Reporting Consulting Events

49 Market development Market development: late-stage commoditization Non-competitive market Competitive market Price formation Cost plus Competing fuel link/formulae Markets time Trade type Source: Adapted from Energy Charter Secretariat based on Andrei Konoplyanik + Short-term contracts + Standard product trade + Futures trade

50 Margin (profit/revenue) How to lose 30 billion euros 30% Profit margins for selected European utilities 20% 10% 0% -10% -20% -30% Centrica RWE EDF Engie Axpo Holding Uniper Eon SE SSE Iberdrola Gas Natural VNG ENI Edison Dong Sector average

51 Conclusions Market Reporting Consulting Events

52 Market development: late-stage commoditization Non-competitive market Competitive market? Price formation Trade type Markets + Short-term contracts Standard products Futures time Source: Adapted from Energy Charter Secretariat based on Andrei Konoplyanik

53 Market development: late-stage commoditization Non-competitive market Competitive market Commodity Grid Tax Price formation Trade type Markets + Short-term contracts Standard products Futures time Source: Adapted from Energy Charter Secretariat based on Andrei Konoplyanik

54 Matthew Monteverde Vice President Commodities Markets skype: matthew_monteverde Stay +Argusmediaplus Argus-media argusmediavideo Copyright notice Copyright 2017 Argus Media group. All rights reserved. All intellectual property rights in this presentation and the information herein are the exclusive property of Argus and and/or its licensors and may only be used under licence from Argus. Without limiting the foregoing, by reading this presentation you agree that you will not copy or reproduce any part of its contents (including, but not limited to, single prices or any other individual items of data) in any form or for any purpose whatsoever without the prior written consent of Argus. Trademark notice ARGUS, the ARGUS logo, ARGUS MEDIA, ARGUS DIRECT, ARGUS OPEN MARKETS, AOM, FMB, DEWITT, JIM JORDAN & ASSOCIATES, JJ&A, FUNDALYTICS, METAL-PAGES, METALPRICES.COM, Argus publication titles and Argus index names are trademarks of Argus Media group. Disclaimer All data and other information presented (the Data ) are provided on an as is basis. Argus makes no warranties, express or implied, as to the accuracy, adequacy, timeliness, or completeness of the Data or fitness for any particular purpose. Argus shall not be liable for any loss or damage arising from any party s reliance on the Data and disclaims any and all liability related to or arising out of use of the Data to the full extent permissible by law.