Energy Market in Asia-Pacific and Canada s Potential for Natural Gas Export. Shahidul Islam

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1 Energy Market in Asia-Pacific and Canada s Potential for Natural Gas Export Shahidul Islam

2 Objective Examine energy demand in Asia-Pacific Especially natural gas Canada s natural gas situation Potential for natural gas export to Asia-Pacific

3 Asia-Pacific Common characteristics Nearly half of world s population Fastest growing economies - overall Differentiated economy and growth Social and political differences Geographical differences

4 Asia-Pacific Region

5 Asia-Pacific: Energy sector Fastest growing energy demand Differentiated / fragmented demand Deficient, Dispersed, Disjointed energy supply Net importer differentiated imports Mixed market forces private companies & national companies

6 Asia-Pacific: Energy Sector Fragmented / differentiated Highly deficient Japan Surplus Australia, Brunei Changing Indonesia, China,

7 Asia-Pacific: Energy Market Complicated Geographic, demographic, economic and political factors Toward more centralized market national companies Lack of basic services in many economies Overall demand continues to grow increasingly becoming deficient

8 Asia-Pacific: Energy Demand Primary energy consumption grew over 300% in 30 years (compared to 85% in world) Higher energy price relative to other regions Imports higher concentration of energy Increased consumption from renewables Continues to use traditional (bio-fuel)

9 Asia-Pacific: Energy demand Primary Energy Consumption (mtoe) (1120%)

10 Asia-Pacific: Energy Demand Oil (mt) Coal (mtoe) Gas (mtoe) Nuclear (mtoe)

11 Asia-Pacific: Energy Consumption Asia-Pacific during the past 30 years World Increase Increase Oil (mt) % % Gas (mtoe) % % Coal (mtoe) % % Electricity (twh)* % % Nuclear (mtoe) % % Hydro (mtoe) % % Primary energy (mtoe) *1985 generation; Source: BP, % %

12 Asia-Pacific: Energy Supply Proven reserve - small Oil 2% nearly half in China Gas 8% Australia, China, Indonesia Coal 30% China, Australia, India, Indonesia

13 Asia-Pacific: Energy Supply Supply also grew domestic production Oil China, India, Indonesia, Malaysia, Australia, Thailand, Vietnam Gas China, Indonesia, Australia, Pakistan, Malaysia Coal China, Indonesia, India, Australia Nuclear Japan (Fukushima in 2011) Hydro China, India, Japan Bio-fuel Bangladesh, China, India, Indonesia, Pakistan, Vietnam

14 Asia-Pacific: Energy production Oil (mt) Gas (mtoe) Coal (mtoe)

15 Asia-Pacific: Energy Production Asia-Pacific World Increase Increase Oil (mt) % % Gas (mtoe) % % Coal (mt) % % CO2 (mt) % % Source: BP, 2015 Does increased production satisfy increased demand?

16 Asia-Pacific: Oil Import (mt, 2014) Production Consumption Import Import % China India Indonesia Japan Malaysia Other Total AP World % of world

17 Asia-Pacific: Gas import (2014) Production Consumption Import % import China India Indonesia Japan Malaysia Other Total AP World % of world

18 Asia-Pacific: Coal import (2014) Production Consumption Import % import China India Indonesia Japan Malaysia Other Total AP World % of world

19 Asia-Pacific: Energy import Inherently deficient Lower reserve Lower production with higher intensity Oil production already surpassed peak Gas and coal likely to surpass soon Sustained deficit may even increase BP forecasts similar scenario

20 Asia-Pacific: Energy Deficit (mtoe) Actual Forecast Oil Gas Coal Total Source: BP, 2015 What may (should) happen???

21 Asia-Pacific: What lies ahead? 1. Internal production 2. Import diversification 3. Production diversification emphasis on renewables 4. Demand management Efficiency Lifestyle Fuel substitution

22 1. Internal production Already at a much higher rate higher reserve to production ratio Oil production already peaked Gas and coal are on the way, if not already Limited opportunity!!!

23 Asia-Pacific: Fossil fuel production Oil (mt) Gas (mtoe) Coal (mtoe)

24 2. Import diversification Importing from many sources some indication further potential exists May provide higher import security or less risk Import dependent Subject to price variability Economic uncertainty

25 3. Production diversification Indication of some degree potential exists, especially on renewable More emphasis is coming due not only to energy scarcity but also to climate concern Paris Agreement 2015 Solar, wind, hydro Nuclear has a gloomy history Biofuel scarcity is increasing

26 4. Demand Energy efficiency World-wide phenomenon energy efficiency AP to participate auto, electronic, etc. Coordinated R & D Lack of financial and institutional ability

27 4. Demand Lifestyle More important Refrain from waste appropriate market mechanism R & D - Technology for on-demand and appropriate amount of energy use Substitution

28 4. Demand Fuel substitution Oil vs. gas vs. electric Duel-fuel capacity Oil and gas Oil and electricity These all can have some effect, but gap between energy production and consumption in the region will remain and likely will widen.

29 Fuel consumption reduction effort Country Nature of target Base year Target year Japan Reduce energy intensity by 30% Brazil Reduce projected power consumption by 10% China Reduce energy intensity by 16% India Improve energy efficiency by 20% Thailand Reduce energy intensity by 25% Philippines Reduce total annual energy demand of all sectors by 10% Source: Doshi and Zahur, 2013

30 Asia-Pacific: Gas Both demand and production continue to increase East Asia Japan and South Korea experience the highest consumption growth China experiences substantial growth in both production and consumption Several countries have reached pick and are experiencing a decline in production

31 Asia-Pacific: Gas Consumption East Asia India China Indonesia

32 Asia-Pacific: Gas Reserve (2014) Country/Region Reserve (tcm) Australia 3.7 China 3.5 India 1.4 Indonesia 2.9 Malaysia 1.1 Other 2.6 Total 15.2 (8.2%) World 186.5

33 Asia-Pacific: Gas Production (2014) Country Production (mtoe) Australia 49.8 Bangladesh 21.2 Brunei 10.7 China India 28.5 Indonesia 66.1 Malaysia 59.8 Myanmar 15.2 Pakistan 37.8 Thailand 37.9 Vietnam 9.2 Other 21.0 Total (15.29%) World

34 Asia-Pacific: Gas import (2014) Production Consumption Import % import China India Indonesia Japan Malaysia Other Total AP World % of world

35 Gas import sources Billion Cubic Meters US Trinidad &Tobago Peru Norway Europe Russian Federation Oman Qatar United Arab Emirates Yemen Algeria Angola Egypt Equatorial Guinea Nigeria

36 Asia-Pacific: Gas Import dependency remains amount depends of several other factors all those discussed. Countries exporting natural gas to Asia-Pacific and countries having potential will continually look for their market share Canada could certainly try to obtain its share How much its potential also depends on it availability and competing ability

37 Canada: Energy Net exporter oil and gas primarily to US Potential for Asia-pacific Second market for Canadian goods GDP growth World investment Majority of middle class Free trade agreement with Asian countries

38 Canada: Natural Gas Reserve and production (2tcm, 160bcm) Currently exports to and imports from US Two broad problems Liquefaction and transportation problem International competition

39 Gas production: Canada (Bcf/day)

40 Conclusion Energy deficiency in Asia-Pacific is to continue and likely to increase Efforts are being made to mitigate fossil energy consumption Demand management energy efficiency, import diversifications Supply management alternative sources (renewables)

41 Conclusion Australia is to satisfy a huge amount of this region s demand Prospect for Canadian natural gas to Asia- Pacific market exists but with stiff competition Canada, being relatively behind in this competition, has less advantage Should Canada try? Of course, and if it does so, sooner the better

42 Thank You Very Much???????