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As the only option for intercontinental gas trade, LNG is the critical link to globalising gas markets, and to the spread of the benefits of gas. But there is no global gas market as there is for oil, mainly due to the capital intensity of its infrastructure. That certainly applies to LNG, and industry will have to mobilize very large investments to maintain supply security. At the same time, gas markets are in flux. Between unconventional gas, questions over nuclear, and varied renewables policies, the entire business model is in transition.
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Towards an efficient LNG market inTowards an efficient LNG market in the Asia ‐ PacificMaria van der Hoeven
Executive DirectorExecutive Director
10 September, 2013
© OECD/IEA 2013
For gas the Asian century is just startingstarting
3 000
l
Primary energy consumptionMtoe
2 000
2 500 coal gas
1 500
1 000
-
500
WEO 2012
© OECD/IEA 2013
Asia Europe and USA
Natural gas is the key to improving air quality in Asiaair quality in Asia
Osaka 1965 Osaka 2013
© OECD/IEA 2013
Economic growth and energy policies will i th i t f A i i l b lraise the importance of Asia in global gas
30% Share of the Asia‐Pacific in global gas demand
20%
25%
15%
5%
10%
0%2 010 2 015 2 020 2 025 2 030 2 035
WEO 2012
© OECD/IEA 2013
Due to geology and geography, LNG will have to play a dominant role in supplying Asia
The old business model is an increasing competitiveness burdenincreasing competitiveness burden
18
20
12/M
Btu
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16$201
Japan (LNG import)
8
10
12
Europe (German import)
4
6
8
US (Henry Hub)
0
2
1991 1994 1997 2000 2003 2006 2009 2012
y
© OECD/IEA 2013
Security issues, depletion and domestic demand growth lead to tight LNG supply
LNG liquefaction plants
i isecurity issuesdeclining gas outputsurging domestic demand
© OECD/IEA 2013
Supply shortfalls double the market impact of Japanese demand increase
New LNG supply is predominantly backed by long‐term contractsbacked by long term contracts
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160bcm
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2013 2014 2015 2016 2017 2018Portfolio LNG The rest of the world Other Asia
Portfolio LNG and secondary re‐exports both play an increasing role
China Japan Capacity
© OECD/IEA 2013
increasing role
Are oil and gas still substitute products?products?3 000 Oil and gas fired power generation in the Asia PacificTwh
2 000
2 500 oil gas
Twh
1 500
2 000
500
1 000
‐2 010 2 015 2 020 2 025 2 030 2 035
WEO 2012
© OECD/IEA 2013
Is a destination clause still essential for project financing?for project financing?
© OECD/IEA 2013
With non‐conventional technology and new discoveries, resources will compete for marketsdiscoveries, resources will compete for markets
45%
The proportion of proven reserves projected to be consumed till 2030
35%
40%
20%
25%
30%
10%
15%
20%
0%
5%
WEO 2007 WEO 2012
© OECD/IEA 2013
WEO 2007 WEO 2012
In 5 years discoveries and reserve additions exceeded production by 175 years worth of Japanese demand
The United States continues to lead non‐conventional developmentp
Technological improvements in
CANADA
Bakken
improvements in seismic, drilling and fracking
Antrim
New Albany
Uinta (CBM)
Piceance (CBM)
Powder River (CBM)
UNITED STATES OF AMERICA
Niobrara
g
“Mass manufacturing”
San Juan (CBM)
Raton (CBM) Marcellus
Devonian
Utica
Fayetteville
BarnettHaynesville
Eagle
Monterey
Woodford
Barnett/
Woodford
gmethods in oil field services
Eagle
Ford
Basin
Shale gas production
This map is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
MEXICO
Strong financial boost from liquids
© OECD/IEA 2013
With US markets saturated, Canadian production growth depends on LNG exports
North America is emerging as a major exporter
70
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C t t
BCM
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Cove Point Russia
Contract signed
30
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DOE
Freeport
Cove Point Russia
Algeria
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30 DOE Approved
Yemen
Egypt
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10
Projects with DOE approval or signed export contracts LNG from other countries
Oman
© OECD/IEA 2013
Can Henry Hub+ emerge as a price signal for Asia?
Russian gas: the East is the manifest destiny?destiny?
•Production constrained by EU and domestic demand•Surging independent production backed by NGLs
Source: Gazprom. Note that political boundaries are not endorsed by the IEA
© OECD/IEA 2013
•Asian exports depend on capital‐intensive infrastructure
Facilitating market development
3rd party access and unbundling in gas ANDelectricity
Wholesale price liberalizationliberalization
Flexible infrastructure
Encouraging entry of new g g ysupply
Diversifying the primary i ( lenergy mix (nuclear,
renewables)
© OECD/IEA 2013
Investment security and producer confidence needs to be maintained
Towards an efficient LNG market inTowards an efficient LNG market in the Asia ‐ PacificMaria van der Hoeven
Executive DirectorExecutive Director
10 September, 2013
© OECD/IEA 2013
