© OECD/IEA 2016 1 © OECD/IEA 2016
IEA Medium-Term Gas Market Report 2016
Keisuke Sadamori Director, Energy Markets and Security
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Growth in global gas demand slows
Growth in gas demand slows as it faces greater competition in the power sector; yet it is the only fossil fuel that does not suffer a decline in its share of the energy mix
0
100
200
300
400
500
600
2009-15 2015-21
bcm
Change in world natural gas demand
Change in total gas demand
2.5 % 1.5 %
Change in per cent
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China drives increase in global gas demand, as the United States takes a back seat
US gas demand growth slows sharply, driven by stagnation in the power sector; EU gas demand gradually recovers on coal & nuclear power plant retirements
-100
-50
0
50
100
150
China Middle East United States India EU Korea and Japan
bcm
Change in natural gas demand by region (bcm)
2009-15 2015-21
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Growth in gas production is led by the United States and Australia
The United States & Australia take over from the more established exporters – Russia, Qatar & ASEAN – as the main source of production growth
-100
-50
0
50
100
150
200
United States Australia Qatar China Russia ASEAN EU
bcm
Change in natural gas production by region (bcm)
2009-15 2015-21
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US gas production stagnates in 2016 but a recovery is expected
Change in US gas production, 2011-2021 (bcm)
Low prices have impacted US gas production; but as market balances tighten & prices gradually recover, robust growth is set to resume
-80.00
-60.00
-40.00
-20.00
0.00
20.00
40.00
60.00
80.00
- 80
- 60
- 40
- 20
0
20
40
60
80
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
bcm
LTO associated gas Marcellus+Utica Others Total
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Greater competition is coming to the European gas market
US LNG is competitive in Europe
Oversupply in global LNG markets will intensify competition; flexible US LNG volumes are well-placed to compete in Europe
Nb: Based on cash costs and on forward curves as of June 7th 2016
0
2
4
6
8
10
12
2013 2015 2017
US
D/M
btu
European hub prices (TTF) Henry Hub indexed LNG delivered to Europe
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Global LNG export capacity increases sharply
LNG capacity additions will be led by the US & Australia over the next five years; projects in Canada & East Africa could also move ahead if demand & prices recover
0
40
80
120
160
200
2009-15 2015-21
bcm
Liquefaction capacity additions
Australia Qatar U.S. Others
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As imports from Japan & Korea are set to decline, the rebalancing of global markets will depend on the rate of expansion in China & other developing Asia
Developing Asia emerges as key engine of LNG import growth
-40
0
40
80
120
160
2009-15 2015-21
bcm
Change in LNG imports by region (bcm)
India China Other developing Asia EU Korea + Japan
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Cross border supply cut
Terrorist attack - sabotage
Natural disaster
Technical disruption
Shortages & infrastructure bottlenecks
Algeria 2013/2016
Egypt/Sinaï 2011-2015
Libya 2011-2013
Nigeria 2014-2016 Yemen 2012-2016
Argentinian - Chile 2004
Russian-Ukrainian conflict 2006/2009/2014
India-Nepal 2015
Katrina & Rita 2005 Japan 2011
Argentina 2004-2015
Polar Vortex 2014-2015
UK 2006/ 2010/2013
Pakistan 2011-2015
Egypt 2014
The amount of LNG capacity that is out of service has almost tripled over the past four years, highlighting security & investment challenges in key producer countries
Gas security: No time for complacency
Angola 2014
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Investment in new LNG export capacity has ground to a halt
The collapse in investment increases the risk of tighter markets in the next decade; concerns about gas supply security could quickly re-emerge
0
10
20
30
40
50
2011 2012 2013 2014 2015 2016 (to date)
bcm
Final investment decisions in liquefaction capacity by year
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Conclusions
The gas landscape is changing: production growth is increasingly driven by the US & Australia; demand growth by developing Asia
Traditional exporters will come under pressure as competition from new supply sources intensifies
Global gas prices are set to stay under pressure as a huge amount of LNG export capacity is coming online just as demand slows
Lower prices have triggered a collapse in new investment
IEA is taking on a new mandate on gas security – low prices & well supplied markets give no cause for complacency
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