international gasforo2020.andeg.org/wp-content/uploads/2020/09/nakul-nair.pdf · •gas and...

International GasAsociacion Nacional de Empresas

Generadoras (ANDEG) Energy Forum

Nakul Nair

September 17, 2020

1 September 17, 2020

BloombergNEF coverage


BNEF coverage

Strategies for a cleaner,

more competitive future


BloombergNEF’s gas & LNG coverage encompasses all key market drivers

Strategies and technology

Supply

Contracts and pricing

Balances and

trade flows

Demand

Source: BloombergNEF.

• Natural gas and LNG pricing data globally

• Trends in LNG contracts signing and key terms

• Gas pricing mechanisms and benchmarks

• Gas and electricity market liberalization

• Company strategies and gas investments

• LNG buyers and suppliers’ strategies

• Global climate policy analysis and impact on gas

• Technology trends, digitization across value chain

• LNG supply and export capacity

forecasts and breakeven cost analysis

• U.S. natural gas production forecasts

and production cost estimates

• Cross-country pipeline gas flows in

key markets like Europe and China

• Domestic gas production estimates

across Asia and Europe

• Data and maps of producer acreage

by U.S. county and producing basins

• LNG exports/imports tracking via Bloomberg

Terminal’s AHOY JOURNEY <GO>

• Analysis of LNG trade flow developments

• Global LNG netbacks and profitability analysis

– shipping costs and floating storage

• Sector demand analysis across major markets

• Fuel-switching potential analysis for major countries

• Long-term competitiveness of gas in the power,

transport, industry and residential/commercial sectors

• Implications of policy movements on gas demand

• Price responsive and seasonal gas demand estimates

• Economics of renewable natural gas and hydrogen



Value of BNEF insights and analysis across a spectrum of clients

Long-term global gas

& LNG outlook

Monthly global LNG &

regional gas reports

Seasonal global gas

outlooks

Weekly & daily

updates

Trading Community

& Analysts

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Executives

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Investors

Business Development (Marketing, Origination)

Strategic insights & research topics: Contract and pricing trends, corporate strategy, market reform, technology advancements, sustainability and more.

Regional dynamics & insights: U.S. gas production, Russia-Ukraine gas dynamics, India’s industrial gas demand, China gas in transport, and more.

BloombergNEF Flagship publications: New Energy Outlook, Levelized Cost of Electricity, Climatescope, Power Market Outlooks across the world.

Recurring publications

Databases & Tools: Global LNG netback calculator, EU & North Asia fuel-switching

calculators, global LNG import/export project database, LNG contracts database, and more

• Global LNG supply and demand outlook

• Country/regional gas demand outlooks – China, Japan, Korea, India, South Asia, Southeast Asia, Europe

• Regional LNG supply outlooks and final investment decision watch-lists

• Global gas summer outlook – LNG, Europe, U.S., North Asia

• Global gas winter outlook – LNG, Europe, U.S., North Asia

• Global LNG monthly – import/exports, trade flows, shipping, weather, forecast, and more

• China Gas monthly, EU Gas monthly, U.S. Gas monthly & U.S. Gas balances (quarterly)

• LNG trade updates: China, Korea, Japan, India, Supply

• EU Power & Gas weekly, U.S. gas storage estimates, Covid-19 Indicator

reports (U.S. Oil & Gas, APAC Power, Australia Power & Gas and more)


Colombia Argentina Mexico

Installed capacity, 2019

Source: PRODESEN, SIE, CENACE, CRE, CNE, CAMMESA, BloombergNEF

Gas50%

Large hydro27%

Oil & diesel10%

Nuclear5%

Coal2%

Small hydro1%

Wind4%

Solar1%

40GWNatural

gas

47%

Oil & diesel

15%

Large hydro

14%

Wind7%

Coal7%

Solar5%

Nuclear2%

Geothermal1%

Small hydro1% Biomass

1%

82GW

Biomass & Waste1%

Coal10%

Gas15%

Large Hydro62%

Small Hydro5%

Oil6%

Solar1%

18GW


Review of 2019 and Covid-19 impactMajor global trends


Source: BloombergNEF, BP, Cedigaz Note: * average of Henry Hub, TTF, and Japan Korea Marker (JKM) for 2019 vs 2018

A year of gains

24.2%Gas share in primary energy mix in 2019

+2.3%Gas demand growth in 2019

+3.5%Gas production growth in 2019

-37%Change in gas prices at key global hubs*

+13%Growth in LNG trade in 2019

+2.9%Growth in gas trade in 2019


Share in global primary energy mix Yearly change in global power

generation, 2019

Global power generation by fuel

type, 2019

Gas growing across the energy sector

Source: BP Statistical Review of World Energy, June 2020.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2001 2004 2007 2010 2013 2016 2019

-400

-200

0

200

400

Coa

l

Ga

s

Hydro

Ren

ew

ab

les

Nucle

ar

Oil

Oth

ers

TWh

27,005TWh

36,4%

23,3%

15,6%

10,4%

10,4%

3,1%0,9%

27,005TWh

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

%

Oil Gas Coal Nuclear Hydro Renewables


Source: BloombergNEF, IGU World LNG Report 2020. Note: Pacific includes

Papua New Guinea, Malaysia and Indonesia. Africa includes Cameroon,

Mozambique, Mauritania/Senegal. Equity offtake figures are rounded.

LNG liquefaction project FIDs

Supply rising in most regions

0

10

20

30

40

50

60

70

80

90

100

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

Billion cubic meters per annum

Pacific RussiaAfricaU.S. CanadaAustralia

Source: Cedigaz. Note: C.I.S. is Commonwealth of Independent States.

Global gas supply

960 1.058 1.138

592 613 648

842 885

901

250 234

218 637

666 687

167 164

162 231

244 247 3.678

3.865 4.001

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

2017 2018 2019

Billion cubic meters

Africa

Latin America

Middle East

Europe

C.I.S.

Asia Pacific

North America


Gas prices in key region EU carbon price allowance Fuel-switching potential in 2020 in

South Korea

Prompting low prices and fuel switching

Source: BloombergNEF Source: BloombergNEF

Source: BloombergNEF, Korea Power Exchange,

KEPCO

0

2

4

6

8

10

12

14

16

ago

14

ago

15

ago

16

ago

17

ago

18

ago

19

$ per MMBtu

Asia, Japan Korea

Marker

U.K. NBP

U.S. Henry Hub

0

10

20

30

40

50

60

2014 2015 2016 2017 2018 2019 2020

EUR/t

EU carbon

price

Required average

carbon price for coal-

gas switching

0

5

10

15

20

25

30

35

40

Jan

-19

Ap

r-19

Jul-

19

Oct-

19

Jan

-20

Ap

r-20

Jul-

20

Oct-

20

TWh

Fuelswitchingpotential

LNG

Coal


Yearly change in LNG

exports, 2019

Demand, supply and geopolitics shaping trade flows

Source: BloombergNEF Note: LNG exports based on 2019 departure year,

imports based on 2019 arrival.

-5 0 5 10 15 20 25

U.S.Russia

AustraliaEgypt

AlgeriaMalaysia

P.N.G.TrinidadNigeriaOman

CameroonU.A.E.Angola

PeruBrunei

ArgentinaNorway

QatarEq. Guinea

Indonesia

Yearly change in LNG

imports, 2019

-10 -5 0 5 10 15

U.K.China

FranceSpain

NetherlandsItaly

BangladeshBelgium

IndiaPortugal

ColombiaMexicoTaiwan

ChileU.S.

JordanArgentina

EgyptSouth Korea

Japan

Yearly change in pipeline

exports, 2019

Source: Cedigaz

Yearly change in pipeline

imports, 2019

-30 -20 -10 0 10

North America

Latin America

Europe

C.I.S.

Africa

Middle East

Asia Pacific

Billion cubic meters-30 -20 -10 0 10

North America

Latin America

Europe

C.I.S.

Africa

Middle East

Asia Pacific



Daily industrial gas demand in Italy Daily power demand in Spain Weekly LNG imports

Market recovering from Covid-19 shock

Source: ENTSO-E, TERNA, Snam, Enagas, BloombergNEF Note: ‘No impact’ demand forecasts are based on

historical data, temperatures, cyclical factors, and take into consideration weekends and national public holidays,

but not the impact of Covid-19. The solid blue series represents a 70% confidence interval, the light blue is 95%. Source: BloombergNEF

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

1-e

ne

15-e

ne

29-e

ne

12-f

eb

26-f

eb

11-m

ar

25-m

ar

8-a

br

22-a

br

6-m

ay

20-m

ay

3-ju

n


Europe

China

India

0

5

10

15

20

25

30

35

40

45

50

mcm/d

Actual value

No impact forecast

0

5

10

15

20

25

30

35

GW

Actual value

No impact

forecast

Extreme

lockdown

forecast


Short-term future of LNG


Source: BloombergNEF.Source: BloombergNEF.

Three Covid-19 pandemic scenarios Covid-19 impact on LNG demand

Covid-19 Impact: Pandemic duration will determine demand loss depth in 2020

Scenario 1:

Single-wave

pandemic

Scenario 2:

Multiple-wave

pandemic

Scenario 3:

Enduring

pandemic

Key elements

• Virus impact largely confined

to 1H 2020.

• Economic recovery is well

underway in much of the

world from 4Q 2020.

• Covid-19 outbreak continues

into 2H 2020, but gets under

control in early 2021.

• Economic growth returns in

2Q 2021.

• Repeated waves of outbreak

in countries, suppression

measures required into 2021.

• Mid-2021 a treatment or

vaccine is successfully

scaled up and brings the

pandemic under control.

• Economic recovery begins in

Q4 2021.

BASE CASE

300

310

320

330

340

350

360

370

380

390

400

2018

2019

2020

2021

2022

2023

2024

2025

Million metric tons

Scenario 3

Scenario 2

(Base case)

Scenario 1

LNG demand impact• LNG demand could fall by

1.1% in 2020 versus last year.

Demand is likely to recover in

2021 and edge over 2019

levels.

• LNG demand could fall by

4.4% in 2020. Recovery starts

in 2021, but demand is unable

to reach 2019 levels. By 2022,

demand converges with

Scenario 1.

• LNG demand could fall by

5.3% in 2020. It declines

further in 2021 as economic

growth and infrastructure

development is severely

impacted. Recovery comes

around in 2022 and demand

could recover to Scenario 1

levels by 2024.


August 2020 update: Covid-19 takes its toll on the LNG market, but worst may be over

Source: BloombergNEF, Bloomberg Terminal.

Covid-19 cases globally LNG imports to major markets Futures front-month prices

Chinese and Korean terminals Europe gas storage levels Monthly U.S. LNG exports


Long term future of LNG



Source: BloombergNEF. Note: FID is final investment decision. CAGR is

compound annual growth rate.

Global LNG supply-demand outlook

Global outlook: Supply glut continues for over 10 years as demand gap is pushed out

-1.8%

+6.2%

+7.4%

+3.0%

-1.0%

CAGR

(2020-2040)

Supply-demand gap

-250

-200

-150

-100

-50

0

50

100

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

38

20

39

20

40

Million metric tons

Excess supply in market

Shortfall in supply


Source: BloombergNEF. Note: Based on BNEF’s base case scenario.

Nameplate capacity by trains shown in full, not prorated. Source: BloombergNEF. Note: FID is final investment decision.

Global LNG supply outlook Expected capacity additions

Supply boom: Market can afford to delay commissioning the next wave of supply

Pacific RussiaAfricaU.S. Canada

Demand


Source: BloombergNEF. Note: Not all proposed LNG projects shown here, especially small-scale projects and U.S. projects which have not received all their permits.

Global LNG project proposals

Supply project watch list: Ability to progress hinges on securing enough buyers


Growth and opportunitiesSector and regional analysis


Source: BloombergNEF. Note: ‘Others’ include fuel cells, direct importers for

Korea and includes non-energy use, agriculture, forestry, fishing, and

unspecified for Europe.

Source: BloombergNEF. Note: Sector shares are aggregated using LNG

demand by sector for various countries. In the absence of sector level

consumption data of LNG, assumptions are made based on total gas

demand, except where LNG demand is known to be driven by specific

sectors (e.g. LNG-to-power projects).

Global LNG demand by sector Gas demand share by sector

Sector growth: Share of LNG in power falls, but rises in industry and transport

China

India

Japan and Korea

Europe

0%

50%

100%

2020 2040

0%

50%

100%

2020 2040

0%

50%

100%

2020 20400%

50%

100%

2020 20400%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2020 2040

%

Others

Transport

Residential &Commercial

Industry

Power0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2020 2040

%

Others

Transport

Residential &Commercial

Industry

Power


Share of LNG demand by

market

Asia’s demand growth

by country

Regasification capacity

Demand growth: South and Southeast Asia becomes largest import region in 2040

Source: BloombergNEF. Source: BloombergNEF. Source: BloombergNEF.

0

100

200

300

400

500

600

700

800

900

1,000

Million metric tons

Others

Europe

South,

Southeast

Asia

North Asia

OperationalUnder construction

Total

2020

demand

2040

demand


Latin America


Source: BloombergNEFSource: BloombergNEF

LNG demand by country, 2010-2040 Brazilian LNG infrastructure

0

5

10

15

20

25

201

02

01

22

01

42

01

62

01

82

02

02

02

22

02

42

02

62

02

82

03

02

03

22

03

42

03

62

03

82

04

0

Other Carribean,Central America

DominicanRepublic

Puerto Rico

Mexico

Chile

Argentina

Brazil

Million metric tons

LNG imports to reach 20MMtpa in 2040

Barcarena FSRU

4.0MMtpa

Pecem FSRU

1.9MMtpa

Guanabara

FSRU

3.7MMtpa

Bahia FSRU

3.7MMtpa

Sergipe FSRU

3.7MMtpa

Gas Natural

Acu FSRU

5.0MMtpaOperational

Proposed

Inactive

Gas power plant


Change in Latin America LNG imports,

2020 vs 2019

Colombia LNG imports by month, 2017-

2020

Colombia LNG demand spikes amidst low prices

0

20

40

60

80

100

120

140

160

Jul17

Oct17

Jan18

Apr18

Jul18

Oct18

Jan19

Apr19

Jul19

Oct19

Jan20

Apr20

Jul20

Thousand metric tons

-2,5

-2,0

-1,5

-1,0

-0,5

0,0

0,5

Co

lom

bia

Arg

en

tin

a

Ja

ma

ica

Ch

ile

Pa

na

ma

Do

min

ica

n R

epu

blic

Pu

ert

o R

ico

Bra

zil

Me

xic

o

Million metric tons


Decarbonization of gasHydrogen


Source: BloombergNEF

The development of decarbonized gas is a crucial next step for climate goals to be reached


Up to 37% of global emissions could be abated using hydrogen – 22% for less than $100/tCO2Marginal abatement cost curve of using $1/kg hydrogen for emission reductions versus low-cost fossil fuels, 2050

0

20

40

60

80

100

120

140

160

180

0 1 2 3 4 5 6 7 8 9 10 11 12

Carbon price ($/tCO2)

GtCO2/year

Zero-cost

abatement

Methanol

Gas power generation

Space and water heating

Shipping

Glass

Aluminum

Ammonia

Cement

Steel

Cars Buses Trucks

Oil

refining

Source: BloombergNEF. Note: sectoral emissions based on 2018 figures, abatement costs for the use of renewable hydrogen (delivered at $1/kg to large users, $4/kg to road vehicles)

as a substitute for the lowest-cost fossil fuels in use today globally. Actual abatement costs will vary by country, depending primarily on prevailing fossil fuel prices.


Source: BloombergNEF. Note: Aluminum demand is for alumina production and aluminum recycling only. Cement demand is for process heat only. Oil refining demand is for hydrogen

use only. Road transport and heating demand that is unlikely to be met by electrification only: assumed to be 50% of space and water heating, 25% of light-duty vehicles, 50% of

medium-duty trucks, 30% of buses and 75% of heavy-duty trucks.

Hydrogen could meet up to 24% of the world's energy needs by 2050Potential demand for hydrogen in different scenarios, 2050

Theoretical max Strong Policy Weak Policy

6MMT

Light trucksBuses

Heavy trucks

Ships

Industry

515MMT

Power

439MMT

Buildings

106MMT

Ammonia

Oil refiningAluminum

SteelCement

Peaking power

Space and water

heating

Total energy: 195EJ

Total H2 demand: 1370MMT

99EJ

696MMT

27EJ

187MMT

53MMT

219MMT

123MMT

301MMT21MMT

37MMT123MMT

Glass

Cars

Methanol

Transport

524MMT


Source: BloombergNEF

Low density makes pipelines the best transport option

0

1

10

100

1.000

1 10 100 1.000 10.000

Distance (km)

Volume (tons/day)

Local Urban Inter-city Inter-

continental

Large

Mid

Small

Very

small

0.06 0.22 1.82

0.05 0.10 0.58

0.76 1.73

3+Ships

3.87

Unviable

Unviable

Transmission pipelines

Distribution pipelines

Trucks

CGH2 LOHCCGH2

NH3

H2 transport costs based on distance and volume ($/kg) 2019


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