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Presentation by Alex Ferguson, CBI senior policy adviser, energy, at the CBI NI energy conference. February 2012
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Energy market outlook 2012Alex Fergusson | Senior Policy Adviser | Energy
February 29 2012
The UK is increasingly dependent on imported gas
Source: DECC Digest of United Kingdom energy statistics 2011 2
Gas markets: the global contextA supply side glut?
Conventional gas supplies seem assured, but is Russia looking to sell eastward?
Unconventional gas: a global supply glut?
Shale LNG
3
Gas markets: the global contextDemand side pressures?
Source: International Energy Agency: World Economic Outlook 2011 4
Gas markets: the global contextDemand side pressures?
Germany: extra 16bcm by 2020
Italy, Switzerland
Japan: what future for nuclear?
Impact of Fukushima
Economic growth and increased demand
Environmental impact of coal
Demand increase to 500 bcm by 2035
China and the environment
Eurozone crisis
Oil indexation leading to decreased competitiveness
Push on renewables
European demand limits
5
Gas markets: the global contextDemand side pressures? Germany
Source: International Energy Agency: World Economic Outlook 20116
Gas market outlookPrice prospects
Past: Russia all importantFuture: what happens to US production and Asian demand at least as important.
Source: Financial Times: Commodities Index February 20 2012 7
Oil markets: the global context
Iran and the EU embargo
The Arab Spring
Iraq: the supply side wildcard?
Supply side ‘events’
OPEC subsidies
China and India demand growth
Eurozone demand fragility
Energy efficiency: the demand side wildcard?
Demand side easing?
Global reserves: 50 to 55 years at current consumption
8
Oil market outlookCurrent prices
25% below 2008 peak
Stock levels below long run average for fifth consecutive month pointing to upside price risk
Source: CBI analysis 9
Oil market outlookCurrent prices
Source: Financial Times: Commodities Index February 20 2012
10
Oil market outlookFuture prices
Year WTI (USD/bbl) Brent (USD/bbl)
2012 105 115
2013 113 120
2014 117 123
2015 120 125
Source: CBI analysis 11
Electricity market outlook
12
Policy costs: Electricity Market Reform
Carbon costs: ITRE vote on ETS set aside Carbon floor price in NI?
Energy efficiency? Green Investment Bank