The Global Natural Gas Industry Orlando CABRALES SEGOVIA Presidente de Naturgas, Colombia Regional Coordinator International Gas Union August 28 218
IGU Members serve 97% of the Worlds Gas Market 91 Charter Members 72 Associate Members Founded in 1931 16 IGU Presidency 218-221 Korea IGU Secretariat Barcelona, Spain 2
Global Gas Report 218 Special Edition WGC218
Top 1 global gas developments in 217 5 Russian production growth 4 European consumption growth 6 US production growth 9 Flexible tech. (Malta and Turke y FSRU) 2 Chinese consumption growth 6 New production (Zohr) 9 Flexible tech. (China SSLNG) Global highlights 3 Asian spot LNG price increase 1 Global consumption growth 1 First FLNG (Malaysia) 7 Global LNG market liquidity 8 Mozambique LNG FID 6 New production (Australia LNG)
217 developments in global gas Trade Region average Region Consumption Gas price Production Imports Exports Infrastructure Africa 6.7% - 8.6% -5.% 8.9% LNG liquefaction (Mozambique FID) Asia 5.3% +$1.1/MMBtu (Japan spot) 4.1% 1.% 1.6% Regional LNG liquefaction and regas; Chinese pipeline developments CIS 6.3% - 6.8% 6.9% 7.8% Russia LNG (Yamal) Europe 6.1% +$1.1/MMBtu (NBP) 1.9% 12.% 14.3% Pipeline development (TANAP) Latin America.4% -.1% -7.7% -7.7% No key developments Middle East 4.8% - 4.1% -3.7% -.1% No key developments North America -.8% +$.5/MMBtu (Henry Hub).5% 8.% 16.5% US liquefaction and cross-border pipelines
Unconventionals have been the key source of global gas production growth Global gas production growth by type Unconventional gas production by country Unconventional +1.8% bcm Conventional -.5% bcm 4, 8 3,455 3,527 3,531 3,261 3,339 3,421 3,441 19 6 1 17 65 491 557 656 725 3, 411 591 763 6 243 2, 4 763 1, 2,85 2,849 2,864 2,849 2,799 2,82 2,768 2 411 Δ between 21-216 Unconventional (%) 21 211 212 213 214 215 216 13 15 16 17 19 21 22 21 US Canada China Australia Argentina Other countries 216 Source: Rystad data (Gas production), BCG analysis
Strong global gas trade growth in 217 led by US, Russia, and Australia exports Global gas trade by year 217 annual change in exports bcm 4, 3, 2, 1, 382 295 324 317 315 321 328 349 693 71 76 725 691 714 758 822 1% 22% 67% 216 total US 22.8 Russia 2. Australia 15.4 Norway 11.2 Nigeria 4.2 Angola 4.1 Iran 3.2 Malaysia 2.9 Canada 1.3 Turkmenistan 1.3 Kazakhstan 1. UK 1. Inra-Europe (other) Qatar -2.8 Netherlands -5.1 Other -8.2 217 total 25.2 +9% 21 211 212 213 214 215 216 217 1,15 1,2 1,25 Intl LNG Intl Pipeline Domestic supply Pipeline LNG bcm Source: Cedigaz global trade data, BCG analysis
LNG capacities growing at 6% per year 4x global consumption growth Global liquefaction capacity bcm 1,2 1, 8 Global regasification capacity bcm 1,2 1, 8 +5.8% 6 4 2 25 235 26 24 27 251 28 251 29 318 +6.5% 21 335 211 346 212 353 213 367 214 382 215 48 216 466 217 52 6 4 2 25 59 26 635 27 639 733 28 813 29 825 21 211 858 212 878 213 926 214 971 215 1,19 216 1,9 217 1,157 Liquefaction Utilization 1 (%) 81 Regasification 88 9 9 76 88 94 9 86 84 8 75 77 32 Utilization 2 33 36 31 3 36 38 36 34 33 32 32 33 (%) Decline driven by cap. increase in Asia/Oceania 3 and Africa 4 Decline driven by Europe and N. America 1. Liquefaction utilization = LNG Exports/Liquefaction capacity * 1 2. Regasification utilization = LNG Imports/Regasification capacity * 1 Source: CEDIGAZ data (Trade, Plants, Terminals), IGU, BCG analysis
In 217 gas prices rose in Europe and Asia vs. other fuels Oil, Gas and Coal prices in major reference markets 211-217 North America Europe Asia $/MMBtu $/MMBtu $/MMBtu 24 24 24 18 18 18 12 12 12 6 6 6 21 212 214 216 218 21 212 214 216 218 21 212 214 216 218 WTI HH US Coal 1 Brent NBP Eur. Coal Dubai NEA Spot Asia Coal 1. US coal price is Central Appalachia price 2. Rotterdam index 3. Australia coal Source: World Bank, Bloomberg, EIA, BCG analysis
Rapid gas growth expected to continue Gas is projected to be the fastest growing fossil fuel... 1.6% Annual gas growth to 24... based on key growth regions and se ctors... Share of growth by 24 38% Non-OECD Asia... enabled by key market Developments Economic development/growth 2% Middle East Increasing global gas supply #2 Source of global energy by 24 1% 9% 7% 16% Africa Industry Transport (Bunkers and N. Am.) Other Supportive government polici es
Requirements and measures to achieve global gas growth 1. Cost competitiveness 2. Security of supply 3. Sustainability 1A. Reducing LNG costs through the supply chain 1B.Pricing environmental externalities 1C. Development of local gas production 2A. Expanding gas pipeline and storage infrastructure 2B. More flexible LNG contracting 2C. Development of new access-enabling technologies 3A. Adoption of local air pollution policies 3B. Development of low carbo n technologies for gas 3C. Addressing the methane emissions challenge Industry action required Gov. action required
China: Multiple policy measures driving rapid growth of gas across all sectors Policies supporting gas consumption Gas consumption growth across sectors Coal boiler conversation to gas Target conversation of 2k coal boiler units to natural gas to meet local pol lution targets New residential connections Target to increase penetration from 35% to 85%, adding >12m new conne ctions Incentives for CNG/LNG for transport Discounts provided on prices in gas price formula Gas consumption of cars targeted to more than double from 214 to 22 New 5 year plan prioritizing gas power Targeting 44GW of new gas-fired capacity though also targeting 2GW of new coal capacity Gas consumption by sector (%) 1 75 5 25 Other Transport 13% +4bcm 9% 7% +11bcm 1% 2% +11bcm 18% 12% +12bcm 13% 27% +17bcm 25% 21% +21bcm 24% 21 215 Power Production Energy use Comm & Res Industry Source: CEDIGAZ data (Terminals and Plants), IEA data (Natural gas balance), analyst reports, BCG analysis
UK: Share of gas in power is growing following the increase in carbon price floor UK power generation capacity UK power generation capacity (GW) 15 Announcement of carbon price floor in 211, set at 18/T from 216 UK power production by source UK power production (TWh).4 Gas-fired generation increased by 4% in 216, replacing coal s hut downs 1 5 31 42 46 9 11 9 9 8 36 36 38 43 33 19 11 9 1 12 1 1 18 4 1 21 215 22 225 2 Complete coal p hase out expecte d around 225.3.2.1. 21 211 212 213 214 215 216 217 All renewables Nuclear Gas Coal Oil Other Hydro Wind & Solar Other Renewable Nuclear Gas Coal Oil Other Source: IEA, Ofgem, BCG analysis
Opportunities and requirements for gas in cities Gas provides specific advantages for cities...... but requires multiple enablers Air pollution: nearly zero sulphur dioxide, nitrogen oxide, and no particulate matter emissions GHG emissions: 4% less than coal and 2% less than oil Heat intensity: Most heat intensive (and thus highest eff iciency) fuel source Scalability: Ease of adding customers to existing networks once infrastructure is developed 1 2 3 4 Infrastructureinvestment of $34-55B/ yr in gas midstream Scaling up consumption over time, starting with large scale anc hor customers in industry and power generation Technological innovation to expand gas applications and enable sustainability goals Government policies enabling consumption, particularly for reducing air pollution
Thank you