New Delhi 24 November th IEF-IGU Ministerial Gas Forum IEF Background Materials

Transcription

1 New Delhi 24 November th IEF-IGU Ministerial Gas Forum IEF Background Materials

2 Overview Challenges 2. 7 Observations on gas markets 3. What the JODI Gas Data Base Shows 4. 3 Proposals

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4 7 Observations on gas markets 1. Gas demand will continue to grow to 2040, especially in Asia growth markets 2. LNG trade and new price signals create a global gas market 3. Abundant gas supplies show reduction in LNG investment 4. Lower spot prices mean higher longer term prices will remain subject to renegotiation 5. Traditional contract clauses on price indexation, destination, nomination and others are eased 6. US exports reduce Asian prices due to hub indexed prices and geography; panama canal 7. Gas is likely to play a larger role for longer in keeping up with future global energy demand

5 7 Observations on gas markets 1. Gas demand will continue to grow to 2040, especially in Asia growth markets 2. LNG trade and new price signals create a global gas market 3. Abundant gas supplies show reduction in LNG investment 4. Lower spot prices mean higher longer term prices will remain subject to renegotiation 5. Traditional contract clauses on price indexation, destination, nomination and others are eased 6. US exports reduce Asian prices due to hub indexed prices and geography; panama canal 7. Gas is likely to play a larger role for longer in keeping up with future global energy demand

6 Producers see gas take the largest share of demand % 35 World Primary Energy Demand Shares Outlook Reference Case to Oil Coal Gas Non Fossil* * Includes nuclear, hydro, biomass and other renewables Data Source: OPEC World Oil Outlook November 2016

7 Consumers see more moderate natural gas growth IEA and OPEC project annual gas growth from 1.5%-1.9% to 2.1% up to 2040 Primary Energy Demand Shares in 2014 and 2040 IEA and OPEC New and Current Policy Scenarios and Reference Case 100% 90% 80% 70% 60% 10% 10% 5% 5% 21% 22% 6% 4% 5% 11% 9% 10% 7% 24% 5% 24% 6% 27% 50% 40% 30% 31% 31% 27% 28% 26% 20% 10% 29% 28% 23% 27% 24% 0% IEA OPEC IEA NPS IEA CPS OPEC Other renewables Biomass Hydro Nuclear Gas Oil Coal Data Sources: OPEC World Oil Outlook IEA World Energy Outlook November 2016

8 Asian Pacific gas trade is dominated by LNG Bcm 300 Asian Pacific Pipeline and LNG Import Volumes BP Cedigaz Data Pipeline LNG

9 But growth has peaked and slowed bcm 300 Asian Pacific Pipeline and LNG Import Volumes BP Cedigaz Data , Indicative IEF trends lines Pipeline LNG

10 7 Observations on gas markets 1. Gas demand will continue to grow to 2040, especially in Asia growth markets 2. LNG trade and new price signals create a global gas market 3. Abundant gas supplies show reduction in LNG investment 4. Lower spot prices mean higher longer term prices will remain subject to renegotiation 5. Traditional contract clauses on price indexation, destination, nomination and others are eased 6. US exports reduce Asian prices due hub to indexed prices and geography; panama canal 7. Gas is likely to play a larger role for longer in keeping up with future global energy demand

11 Convergence show transferable prices across regions Gas is commoditizing but prices continue to reflect regional characteristics US$/Mmbtu Regional Natural Gas Prices Trends US$/Barrel Jan-16 Mar-16 May-16 Jul-16 Sep US Natural Gas Europe Natural Gas LNG Japan Crude Oil Global Average RHS Source: World Bank Average Annual Commodity Prices to 2015, and Average Monthly Prices from January to October 2016

12 7 Observations on gas markets 1. Gas demand will continue to grow to 2040, especially in Asia growth markets 2. LNG trade and new price signals create a global gas market 3. Abundant gas supplies show reduction in LNG investment 4. Lower spot prices mean higher longer term prices will remain subject to renegotiation 5. Traditional contract clauses on price indexation, destination, nomination and others are eased 6. US exports reduce Asian prices due to hub indexed prices renewed contract flexibility and geography; panama canal 7. Gas is likely to play a larger role for longer in keeping up with future global energy demand

13 Slow down in LNG investment recovers after 2020 with North America and Asia in lead Global LNG Investment -28% Regional LNG Investment 3% 2% 1% 6% 6% 37% 12% % North America Asia Eastern Europe FSU Australasia Africa Middle East West Europe Latin America Sources 2016 Douglas Westwood World LNG Market Forecast

14 7 Observations on gas markets 1. Gas demand will continue to grow to 2040, especially in Asia growth markets 2. LNG trade and new price signals create a global gas market 3. Abundant gas supplies show reduction in LNG investment 4. Lower spot prices mean higher longer term prices will remain subject to renegotiation 5. Traditional contract clauses on price indexation, destination, nomination and others are eased 6. US exports reduce Asian prices due to hub indexed prices and geography; panama canal 7. Gas is likely to play a larger role for longer in keeping up with future global energy demand

15 7 Observations on gas markets 1. Gas demand will continue to grow to 2040, especially in Asia growth markets 2. LNG trade and new price signals create a global gas market 3. Abundant gas supplies show reduction in LNG investment 4. Lower spot prices mean higher longer term prices will remain subject to renegotiation 5. Traditional contract clauses on price indexation, destination, nomination and others are eased 6. US exports reduce Asian prices due hub indexed prices and geography; panama canal 7. Gas is likely to play a larger role for longer in keeping up with future global energy demand

16 Short-term LNG demand eased on reduced demand Bcm 80 Asian Short Term LNG Purchases * Total Japan South Korea India China Other Asia *Estimates Sources Chi-Kong Chyong and Roman Kazmin The economics of global LNG trade: The case of Atlantic and Pacific inter-basin arbitrage in University of Cambridge Energy Policy Research Group Working Paper 1602, January 2016 Howard V. Rogers Asian LNG Demand Key Drivers and Outlook. Oxford Institute for Energy Studies NG 106, April 2016

17 7 Observations on gas markets 1. Gas demand will continue to grow to 2040, especially in Asia growth markets 2. LNG trade and new price signals create a global gas market 3. Abundant gas supplies show reduction in LNG investment 4. Lower spot prices mean higher longer term prices will remain subject to renegotiation 5. Traditional contract clauses on price indexation, destination, nomination and others are eased 6. US exports reduce Asian prices due to hub indexed prices, and geography; panama canal 7. Gas is likely to play a larger role for longer in keeping up with future global energy demand

18 LNG - pipeline interactions stage the future bcm 1200 Historical gas trade volumes by pipeline and LNG 1000 Phase I Phase II Phase III 800 Newly Independent States Financial Crisis New Borders New Players Rising Hubs Liquidity/Price Re-negotiations BP 2016 Cedigaz 2015 Data Pipeline LNG Total

19 Chances for gas to deliver transition are historic More dialogue and new approaches are needed Net Tradable Volumes Across Key Regions by 2020 deficit Surplus Europe -273 China -148 Asia Oceania -78 Other Asia -10 Latin America -1 North America 51 Africa 78 Middle East 128 Euro Asia bcm IEA 2015 Data

20 New sources, routes and price discovery mechanisms create more competitive Asian Market Key Gas Trading Hubs New Gas Trading Hubs

21 LNG project launches in Australia Project North West Shel Venture T 1-5 Darwin LNG T1/2 Partners Woodside, BHP Billiton, BP, Chevron, Shell, MIMI ConocoPhillips, Inpex, Eni, Santos, Tokyo Electric, Tokyo Gas Total Capacity bcm/y Expenditure $billion First Start up Pluto T1 Woodside, Kansai Electric, Tokyo Gas Arrow Shell, Petro China Cancelled in 2015 Browse FLNG Wodside, Shell, BP, Japan LNG, PetroChina n.a. 40 Cancelled 2016 Queensland Curtis LNG T1/T2 BG Group CNOOC, Tokyo Gas Gladstone LNG T1/2 Santos, Petronas, Total, Kogas /2016 Australia Pacific LNG T1/T2 Wheatstone T1/2 Origin ConocoPhillips, Sinopec Chevron, Apache, KUFPEC, Kyushu Electric Power Wheatstone / /2017 Gorgon T1-3 Chevron, ExxonMobil, Shell March Ichtys T1/2 Inpex, Total Prelude FLNG Shell, Inpex, KOGAS, CPC Corporation Total Australian LNG Capacity and Expenditure Sources: The Australian Petroleum Production & Exploration Association and Individual Company Reports

22 7 Observations on gas markets 1. Gas demand will continue to grow to 2040, especially in Asia growth markets 2. LNG trade and new price signals create a global gas market 3. Abundant gas supplies show reduction in LNG investment 4. Lower spot prices mean higher longer term prices will remain subject to renegotiation 5. Traditional contract clauses on price indexation, destination, nomination and others are eased 6. US exports reduce Asian prices due hub indexed prices renewed contract flexibility and geography; panama canal 7. Gas is likely to play a larger role for longer in keeping up with future global energy demand

23 Gas can play a larger and longer role in Asia Bcm Total Projected Asian Gas Consumption in High Growth Scenario 530 Bcm Bcm 300 ~240 Bcm Japan South Korea Taiwan China India Singapore Thailand Indonesia Malaysia Pakistan Bangladesh Vietnam Source: Howard V. Rogers Asian LNG Demand Key Drivers and Outlook. Oxford Institute for Energy Studies NG 106, April 2016

24 Overview Challenges 2. 7 Observations on gas markets 3. What the JODI Gas Data Base Shows 4. 3 Proposals

25 The US turned into an LNG exporter in March 2016 bringing a 2 nd wave to markets Mcm 2000 US LNG Net Trade Jan2010 Aug2010 Mar2011 Oct2011 May2012 Dec2012 Jul2013 Feb2014 Sep2014 Apr2015 Nov2015 Jun2016

26 Russian gas production picks up from lows caused by weak domestic demand Russia Natural Gas Production MCM Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Avg

27 Russian gas exports have recovered from 5 year lows reached in 2015 Russia Natural Gas Exports MCM Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Range Avg

28 Algerian gas production grew steadily Algeria Natural Gas Production MCM Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

29 Algerian pipeline exports have increased 6000 Algeria Natural Gas Exports Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Pipeline LNG

30 Indonesian gas exports are in decline Indonesian Natural Gas Exports Jan2010 Apr2010 Jul2010 Oct2010 Jan2011 Apr2011 Jul2011 Oct2011 Jan2012 Apr2012 Jul2012 Oct2012 Jan2013 Apr2013 Jul2013 Oct2013 Jan2014 Apr2014 Jul2014 Oct2014 Jan2015 Apr2015 Jul2015 Oct2015 Jan2016 Apr2016 Jul2016 #N/A Indonesia Natural Gas in Million m3 Exports

31 Indonesian gas demand has fallen too Indonesian Natural Gas Demand MCM Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Range Avg

32 Chinese production remains robust despite economic rebalancing Mcm China Natural Gas Production Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Range Avg

33 Australia LNG exports have taken off since October 2015 reaching new record levels Mcm 4500 Australia LNG Exports Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Range Avg

34 Unlike Japan and Korea, Taiwan LNG imports remain robust at five year highs Mcm Taiwan LNG Imports Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Range Avg

35 Japanese LNG imports have slowed since April 2015 Mcm Japan LNG Imports Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Range Avg

36 Korean LNG imports slowed as well at the lower end of the five year range Mcm 7000 Korea LNG Imports Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Range Avg

37 Greater supply flexibility push Indian LNG imports beyond five year trend Mcm 2500 India LNG Imports Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Range Avg

38 Overview Challenges 2. 7 Observations on gas markets 3. What the JODI Database shows 4. 3 Proposals

39 3 Proposals 1. JODI Gas already covers 90% of world gas demand and supply but data reporting timeliness, completeness and use must be improved. 2. Asia needs to move forward with the establishment of a transparent and effective functioning gas pricing hub. 3. A rolling energy dialogue on gas markets enables producers and consumers to improve prosperity in healthy energy markets.