IEA 2019. All rights reserved.
Oslo – 22 October 2019
Peter Fraser, Gas, Coal and Power Markets Division
Gas 2019 market report
2018 was another golden year for natural gas
Gas demand jumped by 4.6% in 2018, accounting for nearly half of overall demand growth. The United States and China led the growth.
Average annual change in global primary energy demand, 2010-18
100
200
300
2010-16 2017 2018
Mtoe
Energy demand
Natural gas
China
United
States
- 40 - 20 0 20 40 60 80 100 120 140 160 180
Japan
Russia
Europe
Other Eurasia
South and Central America
Other North America
Africa
India
United States
Other Asia Pacific
Middle East
China
bcm
Fast growing Asian markets drive future gas demand
World natural gas consumption growth for selected countries and regions, 2018-24
China accounts for over 40% of global gas consumption growth. All sectors contribute to growth, with industry taking the lead in most markets.
- 40 - 20 0 20 40 60 80 100 120 140 160 180
Japan
Russia
Europe
Other Eurasia
South and Central America
Other North America
Africa
India
United States
Other Asia Pacific
Middle East
China
bcm
Industry
Power generation
Buildings & Other sectors
- 40 - 20 0 20 40 60 80 100 120 140 160 180
Japan
Russia
Europe
Other Eurasia
South and Central America
Other North America
Africa
India
United States
Other Asia Pacific
Middle East
China
bcm
Industry Other sectors
bcm
LNG emerges as an alternative marine fuel
The growth in LNG as a marine fuel is supported by two main segments – cruise and container ships –which account for 80% of expected consumption by 2024.
LNG consumption for maritime shipping by main segment, 2018-24
0
2
4
6
8
2018 2019 2020 2021 2022 2023 2024
bcm
Other
Cruise ships
Container ships
The United States leads production and exports growth
The United States and China account for over half of total production increment to 2024. US and Eurasian exports dominate LNG and pipeline trade growth.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Exports
Production
United States China Middle East
Russia Other Eurasia Egypt
Australia Other Africa South and Central America
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Exports
Production
United States China Middle East
Russia Other Eurasia Egypt
Australia Other Africa South and Central America
United States China
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Exports
Production
United States China Middle East
Russia Other Eurasia Egypt
Australia Other Africa South and Central America
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Exports
Production
United States China Middle East
Russia Other Eurasia Egypt
Australia Other Africa South and Central America
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Exports
Production
United States China Middle East
Russia Other Eurasia Egypt
Australia Other Africa South and Central America
Contributors to natural gas production and export growth, 2018-24
US natural gas production reaches 1 tcm mark by 2024
Associated shale strongly contributes to short-term production growth up to takeaway infrastructure limits and then slows with lesser LTO growth.
Natural gas production, United States, 2014-24
0
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
Global gas trade is rising rapidly, driven by Asian demand
European imports have increased attracted by low prices.
LNG imports, quarterly (2015-19)
0
20
40
60
80
100
120
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2015 2016 2017 2018 2019
bcm
Japan and Korea China Other Asia Europe Other regions Annual average
The United States and China become #1 LNG seller & buyer in 2024
Fast growing Asian economies and Europe account for over 95% of the increase in LNG imports. US exports surge while Australia reaches a plateau and Qatar prepares for expansion*.
World LNG trade for a selection of importers and exporters, 2014-24
0
20
40
60
80
100
120
2014 2016 2018 2020 2022 2024
bcm
China Japan Europe India
0
20
40
60
80
100
120
2014 2016 2018 2020 2022 2024
United States Australia Qatar Russia
LNG Imports LNG Exports
* Considering operating liquefaction plants, projects under construction or with FID as of early June 2019
Northwest Europe supply gap increases…
Import requirements of Northwest Europe (2005-24)
Decreasing Groningen production will increase the region’s import dependence.
0
50
100
150
200
250
300
350bcm
import requirements demand production
Conversion facilities in the Netherlands are heavily used
Conversion facilities now account for 60% of L-cal gas production in the Netherlands, reaching an average utilisation rate of 88% in 2018.
H-gas to L-gas conversion in the Netherlands (January 2015–June 2019)
0
20
40
60
80
100
mcm
/d
H-gas to L-gas conversion Firm conversion capacity
0
1
2
3
4
5
6
7
2013201420152016201720182019
bcm
Russian imports (German entries)
Ukrainian transit Belarus transit Nord Stream
….while spare capacity has declined…
Little spare import capacity during January in the last two heating seasons.
January spare import capacity to Northwest Europe by origin of imports (2013-18)
0
1
2
3
4
5
6
7
Norwegian imports
Continent United Kingdom
0
1
2
3
4
5
6
7
2013 2014 2015 2016 2017 2018 2019
LNG imports
United Kingdom France Belgium the Netherlands
…in a transforming energy system
Northwest Europe could face even greater need for gas on cold, calm winter evenings as nuclear and coal are reduced suggesting more investment in flexible downstream infrastructure is needed.
Northwest Europe’s changing gas flexibility landscape
Leading the new wave of LNG investment
Final investment decisions in new LNG liquefaction capacity (worldwide)
2019 is already a record year for new LNG investment decisions, as North America is leading a wave of investments in LNG supply, supporting a more flexible, resilient & interconnected global gas market
0
20
40
60
80
100
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
(to date)
bcm per year
United States Others
Equity-lifting model gaining popularity
FID-enabling contracts by signing year and structuring model (2014-19)
Equity-lifting has recently facilitated the FID taken on projects such as LNG Canada,Greater Tortue FLNG, Golden Pass LNG, and Arctic LNG 2.
0
10
20
30
40
50
60
70
2014 2015 2016 2017 2018 2019
bcm
Other structures Equity lifting
LNG
Canada
…to a rapidly transforming Asian market
Evolution of Asian LNG buyers types (2010-2024)
Emerging Asian buyers driving future LNG demand growth see LNG as a component oftheir gas supply portfolio.
0% 20% 40% 60% 80% 100%
2024
Share of LNG in gas supply
Emerging buyers Traditional buyers Emerging buyers Traditional buyers
*size of the bubbles indicates annual LNG imports
-20%
0%
20%
40%
60%
80%
100%
0% 20% 40% 60% 80% 100%
LT c
on
tract
s in
LN
G s
up
ply
Share of LNG in gas supply
2010
Towards a global convergence of natural gas prices?
Gas markets in major regions are closing the price gap thanks to the development of global LNG trade. The Asian spot market still faces a higher degree of price volatility.
Evolution of natural gas spot market prices, 2014-19
0
2
4
6
8
10
12
14
16
18
20Ja
n-1
4
Ap
r-14
Jul-
14
Oct
-14
Jan
-15
Ap
r-15
Jul-
15
Oct
-15
Jan
-16
Ap
r-16
Jul-
16
Oct
-16
Jan
-17
Ap
r-17
Jul-
17
Oct
-17
Jan
-18
Ap
r-18
Jul-
18
Oct
-18
Jan
-19
Ap
r-19
Jul-
19
USD
/MB
tu
Europe (TTF) North America (Henry Hub) Asia (Asian LNG spot)
All markets are not (yet) equal when it comes to end users
The influence of market pricing on end users’ prices remains currently limited for most Asian markets.
Asian spot LNG price and domestic prices for a selection of Asian importing countries (2015-19)
0
2
4
6
8
10
12
14
16
USD
/MB
tu Asian LNG spot
China - average city
gate price
Japan - LNG contract
India - domestic gas
price
Pakistan - compound
average price
Pricing remains a challenge in developing markets
Market pricing dominates in North America and Europe – but 85% of growth takes place in other regions. Reforms are underway in major emerging economies to foster gas growth.
Natural gas consumption and price mechanisms per region, 2018, and growth to 2024
0
200
400
600
800
1 000
1 200
North America Asia Pacific Eurasia Europe Middle East Central and
South America
Africa
bcm
Regulated prices Oil indexation Market pricing
0
200
400
600
800
1 000
1 200
North America Asia Pacific Eurasia Europe Middle East Central and
South America
Africa
bcm
Regulated prices Oil indexation Market pricing
Demand increase to 2024
Bas
ed o
n IG
U, W
ho
lesa
le G
as
Pri
ce S
urv
ey(2
01
9)
Conclusions
• Natural gas demand will continue to grow in the medium-term, driven by emerging Asian economies – and led
by China.
• Although production increases in many regions, most of additional exports will come from US LNG and Eurasian
pipeline.
• LNG trade remains the main driver of gas market globalisation, and a major source of incremental supply for
Asia and Europe.
• This growth is supported by a rebound in investment.
• 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 ensure competitive pricing and
sustainable growth in the longer term.
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