CEDIGAZ, the International Association for Natural Gas SUMMARY Medium and Long Term Natural Gas Outlook 2018

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1 CEDIGAZ, the International Association for Natural Gas SUMMARY Medium and Long Term Natural Gas Outlook 218 CEDIGAZ, June 218

2 CEDIGAZ Reference Scenario: Main characteristics Main trends (%/year) Main assumptions Economy Demographics Environment Policy Global GDP growth of 3.4%/year Population growth of.9%/year INDC commitments Announced National Energy Plans* Geopolitics Mitigation of current conflicts post 225 Technology Only current and approved technologies Rapid improvements of economics of REN Energy intensity is improving across regions Pricing Growing influence of spot pricing Oil indexation still in force in Asia *Some National Energy Plans are viewed with caution and key targets can be delayed when considered too ambitious. Projections on global primary energy demand are based on assumptions on the evolution of the world economy, population, energy and environmental policies and technology. Falling energy intensity implies a deceleration of global energy demand. In CEDIGAZ Scenario, price developments enable natural gas to expand its role in the energy mix and also stimulate sufficient investment in E&P and infrastructures to meet rising gas demand. Medium and Long Term Natural Gas Outlook 218 2

3 CEDIGAZ Reference Scenario: Main trends (216 24) %/year Population and economic expansion fuel energy demand growth. India will record the largest volumetric growth in energy demand over the projection 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. Medium and Long Term Natural Gas Outlook 218 3

4 Primary regional energy demand growth and contribution of natural gas Hydro Nuclear Other renewables Bioenergy Coal Gas Oil Natural gas 216 Natural gas 24 Other fuels 216 Other fuels Growth in Unit: Mtoe Medium and Long Term Natural Gas Outlook 218 4

5 Primary energy demand by fuel and region Energy demand growth by zone China US India Other non OECD Asia EU Africa Middle East CIS South & Central America OECD Asia Other Change Changes by zone China US India Other non OECD Asia EU Africa Middle East CIS South & Central America OECD Asia Other Gas Coal Renewables* * Hydro and Bioenergy included Unit: Mtoe The two countries accounting for the majority of energy demand growth India & China both start with coal intensive fuel mixes but will experience total opposite trends in coal consumption over the outlook period. China alone accounts for a quarter of the growth of renewables (bioenergy and hydro included). The EU leads the transition to a lower carbon economy. Medium and Long Term Natural Gas Outlook 218 5

6 Prospects for the global energy mix 216: 13.7 Gtoe 24: 17.3 Gtoe 1% 2% 2% 5% 27% 1% 3% 7% 22% Coal Oil Gas Nuclear Hydro Bioenergy Other renewables 22% 32% 6% 24% 28% The declining shares of coal and oil are offset by increasing use of renewables and gas Medium and Long Term Natural Gas Outlook 218 6

7 Prospects for energy balance by region 3 25 NORTH AMERICA 2 EUROPE 15 CIS MIDDLE EAST Unit: Mtoe Coal Oil Gas Nuclear Hydro Bioenergy Other REN SOUTH & C. AMERICA Growth Energy: + 1%/year Gas: + 1.4%/year Differences in the evolution of the fuel mix across regions strongly impact the global energy transition AFRICA Medium and Long Term Natural Gas Outlook ASIA OCEANIA

8 Natural gas demand prospects by sector Natural gas demand in 216 and 24 by sector 1 9 Power generation Industry, feedstock and energy Residential commercial Transportation Bcm Medium and Long Term Natural Gas Outlook 218 8

9 Natural gas production prospects Bcm South & C. America 5% Africa 6% Europe 7% 216 North America 27% 1 8 Asia Oceania 16% Middle East 17% South & C. America 4% Africa 8% Asia Oceania 17% 24 Europe 4% CIS 22% North America 26% The largest production gains are expected in the Middle East (+ 411 bcm), North America (+ 352 bcm) and Asia Oceania (+ 35 bcm). Middle East 21% CIS 2% Medium and Long Term Natural Gas Outlook 218 9

10 Unconventional natural gas prospects Bcm Global production 35% 3% 25% 2% Total 24 = 4927 bcm Coal to Gas & CBM Biogas 3% 2% Tight Gas 8% Methane hydrates % % 1% 5% Shale gas 22% North America 18% Asia Oceania 2% Other 2% % Conventional Coal to Gas & Biogas Shale gas CBM Tight Gas Methane hydrates Share of unconventional (%) Conventional 65% Non conventional gas (coal to gas and biogas included) provides 62% of supply growth, rising from 823 bcm in 216 to 177 bcm in 24. The bulk of projected unconventional gas production is in the form of shale gas. Medium and Long Term Natural Gas Outlook 218 1

11 Prospects for interregional natural gas trade % 63% 53% 48% 58% 5% 38% 47% 44% Net importers Net exporters Europe Asia Oceania South & Central America North America CIS Africa Middle East Unit: Bcm Note: Total net flows between the seven CEDIGAZ regions (North America, South & Central America, Europe, CIS, Africa, Middle East, Asia Oceania), not including trade within CEDIGAZ regions. Positive numbers denote net imports, negative numbers net exports. Medium and Long Term Natural Gas Outlook

12 Interregional net flows by pipeline and LNG Pipeline trade Bcm LNG trade Exports Imports Exports Imports Note: Pipeline exports from the Middle East and Central Asia to Asia (Iran Pakistan India pipeline & TAPI) are envisaged post 225 in Cedigaz Outlook. Russia s pipeline exports to China via the Western Route have not been included as the Altai project has been postponed indefinitely. The largest growth in interregional pipeline flows is represented by CIS exports to China. The largest growth in interregional LNG flows is represented by US LNG exports to Asian markets. Medium and Long Term Natural Gas Outlook

13 Global LNG Supply Demand Gap 6 Effective Liquefaction Capacity vs. LNG Demand mmtpa Required additional capacity Operational & Under Construction Capacities North America Middle East South & Central America Europe C.I.S. Asia/Oceania Africa World LNG Demand Source: CEDIGAZ LNG Service Delays in the second wave of LNG supply bring a risk of tighter markets in the early 22s. Medium and Long Term Natural Gas Outlook

14 Prospects for global energy related CO2 emissions %/year 1.5 Comparison of scenarios in terms of CO2 emissions Energy demand Energy related CO2 emssions CEDIGAZ (216 24) BP (216 24) IEA New Policies (216 24) ExxonMobil (216 24) IEA SDS (216 24) In CEDIGAZ Scenario, CO2 emissions increase by almost.4%/year to peak at 35.2 Gt to The growth of global emissions declines more strongly in the long term. This scenario remains well above the 2 C path despite the deployment of renewables and efficiency, as well as coal to gas switching. Medium and Long Term Natural Gas Outlook

15 CONCLUSION Natural gas demand will grow by 1.4%/year from 216 to 24 and gas will expand its role in the energy mix, according to CEDIGAZ Gas Outlook 218. Cedigaz Scenario assumes a deceleration of natural gas demand growth over the period, due to a stronger push for renewables and energy efficiency, especially in OECD countries. The growth of natural gas will be backed by the abundance of competitive conventional (Middle East, Russia) and unconventional gas resources (US). A large part of the future natural gas demand growth is driven by China s political support for gas use in power and industry. The strong expansion of LNG supply will help gas to expand in the energy markets, especially in Asia. The growing importance of LNG trade will accelerate the integration of natural gas markets and will result in a closer linkage between international prices. Global peak demand for gas is not expected in the foreseeable future. Due to its environmental advantages natural gas is a key pillar of a gradually decarbonising energy and electricity system. New low carbon technologies are both sources of risks and opportunities for gas demand growth. A more rapid deployment of wind and solar and stronger energy savings could further reduce gas demand growth in the long term. Medium and Long Term Natural Gas Outlook

16 CEDIGAZ Publication «Medium and Long Term Natural Gas Outlook 218» is available online: market analysis.aspx

17 CEDIGAZ, the International Association for Natural Gas CEDIGAZ 1 & 4 Avenue de Bois Préau Rueil Malmaison Cedex France About CEDIGAZ CEDIGAZ is an international association with members all over the world. 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.