the global economy & the state of the gas market
TRANSCRIPT
© OECD/IEA 2012
The Global Economy & The State Of The Gas Market
Dr. Fatih Birol Chief Economist
International Energy Agency
© OECD/IEA 2011
The context: fresh challenges add to already worrying trends
Economic concerns have diverted attention from energy policy & limited the means of intervention
Post-Fukushima, nuclear is facing uncertainty
MENA turmoil raised questions about region’s investment plans
CO2 emissions rebounded to a record high
Durban was a step forward, but is yet to make a noticeable impact on investment
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Energy efficiency offers real gains for energy security, economic growth & the environment
Change in global energy intensity for selected periods
Global energy efficiency development is going in the wrong direction
- 1.5%
- 1.0%
- 0.5%
0.0%
0.5%
1.0%
1971 - 1980 1981 - 1990 1991 - 2000 2001 - 2008 2009 2010
Annual change in g
lobal energ
y inte
nsi
ty
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Coal won the energy race in the first decade of the 21st century
Growth in global energy demand, 2000-2010
Coal accounted for nearly half of the increase in global energy use over the past decade, with the bulk of the growth coming from the power sector in emerging economies
Nuclear
0
200
400
600
800
1 000
1 200
1 400
1 600
Coal
Mto
e
Total non-coal
Natural gas
Oil
Renewables
© OECD/IEA 2011
0
100
200
300
400
500
600
700
2009 2010 2011
Bill
ion
USD
Gas
Oil
2.1%
2.7%
3.3%
Europe: rising energy prices compound the pain of austerity
EU spending on imports was almost two-thirds higher in 2011 than 2009 as a result of higher international oil prices & oil-indexed gas prices
Cost of net imports of oil and gas in the European Union
EU’s net import bills
% Share of GDP
Debt of Greek government (end of 2011)
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Fukushima adds to the economic impact of higher energy prices in Japan
The shutdown of most nuclear plants has created electricity shortages & pushed up spending on oil & gas imports, which in turn has led to Japan’s 1st trade deficit in decades
Cost of net imports of oil and gas in Japan
% Share of GDP
Japan’s net import bills
Bill
ion
USD
0
50
100
150
200
250
2009 2010 2011
Gas
Oil
2.4%
2.9%
3.9%
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OPEC revenues on track to reach another record high
If prices average $120/bbl in 2012, OPEC is set to earn oil export revenues of $1.2 trillion; And Russian oil & gas export revenues would reach $400 billion, or 25% of GDP
OPEC oil-export revenues
* Assuming average crude oil price of $120/barrel
200
400
600
800
1 000
1 200
1 400
2009 2010 2011 2012*
Bill
ion
USD
Net oil export
revenues
0
© OECD/IEA 2011
Natural gas becoming the “default fuel”
The weak economy weighs on demand for all fuels, including natural gas, but its competitors face other problems
Renewables: subsidy programs uncertain in this age of austerity
Nuclear : renewed debate post-Fukushima
Coal: deployment of CCS is disappointingly slow
Further opportunities for natural gas arise from concerns about local pollution & lack of clarity over climate policy
On the supply side, natural gas is becoming increasingly available & often less expensive compared to other fuels
In many cases, this adds up to natural gas becoming the “default fuel”, although uncertainties remain
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European natural gas demand fell sharply in 2011, but other regions saw growth
Based on preliminary estimates, EU27 natural gas demand fell by almost 11% in 2011 returning to levels last seen in 2000, while demand in China & Japan rose sharply
Change in gas demand (bcm)
-60
-40
-20
0
20
40
European Union United States Japan China
bcm
2010
2011
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Gas demand growth comes from China, Middle East, India
Projected natural gas demand by region, 2009 and 2035
Gas demand grows fastest in the non-OECD regions, led by China, which accounts for more than a quarter of the worldwide increase in demand between 2009 & 2035
2009
Additional to 2035
0
200
400
600
800
1 000
North
America
European
Union
Middle
East
Russia China India Japan
bcm
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Global gas resources represent 250 years of current production
Natural gas can enhance security of supply: global resources exceed 250 years of current production; while in each region, resources exceed 75 years of current consumption
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Natural gas supply outlook
Largest natural gas producers in 2035
Gas supply rises by 1.7 tcm by 2035 with Russia, the United States & China being the largest producers
0 200 400 600 800 1 000
Norway
India
Australia
Algeria
Canada
Qatar
Iran
China
United States
Russia
bcm
Conventional
Unconventional
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“Golden Rules“ for a “Golden Age of Gas”
The unconventional gas boom could transform markets if the US success is matched elsewhere, but challenges need to be overcome
land use, water use, risk of water contamination, methane emissions
“Golden Rules” to support a potential “Golden Age of Gas” to be published as a WEO-2012 special report on 29 May
Confirms environmental concerns can be mitigated using available technologies – if companies follow best practices
“Golden Rules” covering:…….
Public engagement & disclosure
Managing water use & the risk of contamination
Controlling air emissions
Project planning & regulatory control
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Concluding remarks
High oil prices are contributing to the economic malaise; further rises could plunge the global economy back into recession
Market uncertainties are creating opportunities for natural gas
We may see a more competitive LNG market & less pronounced price divergence
Gas has a key role to play in in enhancing energy security, reducing local pollution & in moving to a low-carbon energy economy
Unconventional resources could revolutionise energy markets
but “Golden Rules” are essential to mitigate environmental risks