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IEA 2019. All rights reserved.
Gas 2019Keisuke Sadamori, Director, Energy Markets and SecurityTokyo, 13 June 2019
IEA
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Gas demand jumped by 4.6% in 2018, accounting for nearly 45% of overall demand growth.
2018 was another golden year for gasAverage annual change in global primary energy demand, 2010-18
100
200
300
2010-16 2017 2018
Mtoe
Energy demand
Natural gas
The United States led the growth due to relatively low prices and weather, China followed, driven by the push for ‘blue skies’.
China
UnitedStates
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China accounts for over 40% of global gas consumption growthAll sectors contribute to growth
World natural gas consumption growth for selected countries and regions, 2018-24
Fast growing Asian markets drive future gas demand
- 40 - 20 0 20 40 60 80 100 120 140 160 180
JapanRussia
EuropeOther Eurasia
South and Central AmericaOther North America
AfricaIndia
United StatesOther Asia Pacific
Middle EastChina
bcm- 40 - 20 0 20 40 60 80 100 120 140 160 180
JapanRussia
EuropeOther Eurasia
South and Central AmericaOther North America
AfricaIndia
United StatesOther Asia Pacific
Middle EastChina
bcm
IndustryPower generationResidential and commercialEnergy industry own useTransport
- 40 - 20 0 20 40 60 80 100 120 140 160 180
JapanRussia
EuropeOther Eurasia
South and Central AmericaOther North America
AfricaIndia
United StatesOther Asia Pacific
Middle EastChina
bcm
Industry Other sectors
, with industry taking the lead in most markets
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The growth in LNG as a marine fuel is supported by two main segments – cruise ships and container ships – which account for 80% of expected consumption by 2024
LNG emerges as an alternative marine fuel
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2018 2019 2020 2021 2022 2023 2024
bcm
Other
Cruise ships
Container ships
LNG consumption for maritime shipping by main segment, 2018-24
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The United States and China account for over half of total production increment to 2024US and Eurasian exports dominate LNG and pipeline trade growth
Contributors to natural gas production and export growth, 2018-24
The United States leads production and exports growth
Production
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
United States ChinaProduction
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
United States China Middle EastRussia Other Eurasia EgyptAustralia Other Africa South and Central America
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Exports
Production
United States China Middle EastRussia Other Eurasia EgyptAustralia Other Africa South and Central America
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Associated shale strongly contributes to short-term production growth up to takeaway infrastructure limits and then slows with lesser LTO growth
US natural gas production reaches 1 tcm mark by 2024
Natural gas production, United States, 2014-24
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500
1 000
2014 2016 2018 2020 2022 2024
bcm
Other sources
Dry shale - other
Dry shale - Appalachia
Associated shale - other
Associated shale - Permian
Domestic consumption
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Global LNG trade grew at an average 10% per annum in between 2016 and 2018, with strong import increases from emerging Asian markets, as well as Korea and Europe (in late 2018).
LNG drives global gas trade development
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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2015 2016 2017 2018 2019
bcm
Japan and Korea China Other Asia Europe Other regions Annual average
Evolution of LNG imports, quarterly volumes and annual averages, 2015-19
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0
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2014 2016 2018 2020 2022 2024
bcm
China Japan Europe India
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2014 2016 2018 2020 2022 2024
United States Australia Qatar Russia
Fast growing Asian economies and Europe account for over 95% of the increase in LNG importsUS exports surge while Australia reaches a plateau and Qatar prepares for expansion*
The United States and China become #1 LNG seller and buyer in 2024
World LNG trade for a selection of importers and exporters, 2014-24
LNG Imports LNG Exports
* Considering operating liquefaction plants, projects under construction or with FID as of May 2019
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Europe needs to source imports to cover one-third of its demand by 2024, due to sharp declines in its own production & the expiry of pipeline long-term gas import contracts
Europe’s supply gap increases
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100
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400
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600
2014 2016 2018 2020 2022 2024
bcm
Domestic production Long term pipeline contracts Additional supply needed
Domestic production and contracted pipeline vs import needs, Europe, 2014-24
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2018 and early 2019 mark a return to LNG investment growth, with a strong list of additional projects announced to take FID in the course of the year
LNG export projects final investment decisions and announcements, 2016-19
Will 2019 mark the beginning of a new LNG investment cycle?
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30
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150
2014 2015 2016 2017 2018
Nam
epla
te c
apac
ity (b
cm/y
)
Canada Indonesia Mauritania/Senegal Mozambique Qatar Russia United States
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60
90
120
150
Due to announceFID in 2019
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30
60
90
120
150
2019(as of early June)
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New investments in liquefaction and shipping will support LNG trade development but additional capacity will be required to ensure future growth
More investment will be needed in LNG capacity before 2024
70%
75%
80%
85%
90%
95%
100%
105%
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2016 2018 2020 2022 2024
bcm
Needs Capacity Utilisation rate
Liquefaction (available capacity)
70%
75%
80%
85%
90%
95%
100%
105%
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2016 2018 2020 2022 2024
Utilisation rate
vess
els
(174
000
m3
eq.)
Shipping fleet
LNG liquefaction and shipping fleet utilisation rates, 2016-24
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Gas markets in major regions are closing the price gap thanks to the development of global LNG tradeThe Asian spot market still faces a higher degree of price volatility
Towards a global convergence of natural gas prices?
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USD
/MBt
u
Europe (TTF) North America (Henry Hub) Asia (Asian LNG spot)
Evolution of natural gas spot market prices, 2014-19
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Market pricing currently dominates in North America and Europe Reforms are underway in major developing markets to enable sustainable gas growth
Pricing remains a challenge in developing markets
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North America Asia Pacific Eurasia Europe Middle East Central andSouth America
Africa
bcm
Regulated prices Oil indexation Market pricing
Natural gas consumption and price mechanisms per region, 2018, and growth to 2024
Based on IGU, Wholesale Gas Price Survey (2019)
– but 85% of growth will take place in other regions
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North America Asia Pacific Eurasia Europe Middle East Central andSouth America
Africa
bcm
Regulated prices Oil indexation Market pricingDemand increase to 2024
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Conclusions
• Natural gas demand will continue to grow in the medium-term, driven by emergingAsian economies – and led by China.
• Although production increases in many regions, most of additional exports will comefrom US LNG and Eurasian pipeline.
• LNG trade remains the main driver of gas market globalisation, and a major source ofincremental supply for Asia and Europe.
• This growth is supported by a rebound in investment, but additional capacitydevelopment will be necessary before 2024.
• Market prices are converging as global LNG trade expands, and the share of market-driven pricing is increasing in all regions.
• Current gas reforms in major emerging economies are a prerequisite to ensurecompetitive pricing and sustainable growth in the longer term.
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