© OECD/IEA 20161© OECD/IEA 2016

IEA Medium-Term Gas Market Report

2016

© OECD/IEA 20162

Growth in global gas demand slows

Growth in gas demand slows as it faces greater competition in the power sector; yet it is the only fossil fuel that does not suffer a decline in its share of the energy mix

0

100

200

300

400

500

600

2009-15 2015-21

bcm

Change in world natural gas demand

Change in total gas demand

2.5 % 1.5 %

Change in per cent

© OECD/IEA 20163

China drives increase in global gas demand, as the United States takes a back seat

US gas demand growth slows sharply, driven by stagnation in the power sector;EU gas demand gradually recovers on coal & nuclear power plant retirements

-100

-50

0

50

100

150

China Middle East United States India EU Korea andJapan

bcm

Change in natural gas demand by region (bcm)

2009-15 2015-21

© OECD/IEA 20164

Growth in gas production is led by the United States and Australia

The United States & Australia rather than the more establishedexporters – Russia, Qatar & ASEAN – are the main source of production growth

-100

-50

0

50

100

150

200

United States Australia Qatar China Russia ASEAN EU

bcm

Change in natural gas production by region (bcm)

2009-15 2015-21

© OECD/IEA 20165

US gas production stagnates in 2016 but a recovery is expected

Change in US gas production, 2011-2021 (bcm)

Low prices have impacted US gas production; but as market balances tighten & prices gradually recover, robust growth is set to resume

-80.00

-60.00

-40.00

-20.00

0.00

20.00

40.00

60.00

80.00

- 80

- 60

- 40

- 20

0

20

40

60

80

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

bcm

LTO associated gas Marcellus+Utica Others Total

© OECD/IEA 20166

Greater competition is coming to the European gas market

US LNG is competitive in Europe

Oversupply in global LNG markets will intensify competition; flexible US LNG volumes are well-placed to compete in Europe

Nb: Based on cash costs and on forward curves as of June 7th 2016

0

2

4

6

8

10

12

2013 2015 2017

US

D/M

btu

European hub prices (TTF) Henry Hub indexed LNG delivered to Europe

© OECD/IEA 20167

Global LNG export capacity increases sharply

LNG capacity additions will be led by the US & Australia over the next five years; projects in Canada & East Africa could also move ahead if demand & prices recover

0

40

80

120

160

200

2009-15 2015-21

bcm

Liquefaction capacity additions

Australia Qatar U.S. Others

© OECD/IEA 20168

As imports from Japan & Korea are set to decline, the rebalancing of global markets will depend on the rate of expansion in China & other developing Asia

Developing Asia emerges as key engine of LNG import growth

-40

0

40

80

120

160

2009-15 2015-21

bcm

Change in LNG imports by region (bcm)

India China Other developing Asia EU Korea + Japan

© OECD/IEA 20169

86%

88%

90%

92%

94%

96%

98%

11 12 13 14 15 16 17 18 19 20 21

Utilization rate

Liquefaction plants to run below capacity amid supply glut

Note: nameplate capacity has been adjusted to reflect outages, and feed-gas issues

Oversupply in the market will get worse before it gets better. This will put pressure for increased flexibility in contracts and a reduced linkage to oil.

© OECD/IEA 201610

Outages and feed gas issues: a growing problem

A growing level of LNG export capacity has gone offline over the past five years highlighting security and investment challenges across a host of producers

0.0

10.0

20.0

30.0

40.0

50.0

60.0

0

10

20

30

40

50

60

2011 2012 2013 2014 2015

bcm

Liquefaction capacity offline

Algeria Angola Egypt Yemen Other countries

© OECD/IEA 201611

Investment in new LNG export capacity has ground to a halt

The collapse in investment increases the risk of tighter markets in the next decade; concerns about gas supply security could quickly re-emerge

0

10

20

30

40

50

2011 2012 2013 2014 2015 2016 (to date)

bcm

Final investment decisions in liquefaction capacity by year

© OECD/IEA 201612

Conclusions

The gas landscape is changing: production growth is increasingly driven by the US & Australia; demand growth by developing Asia

Traditional exporters will come under pressure as competition from new supply sources intensifies

Global gas prices are set to stay under pressure as a huge amount of LNG export capacity is coming online just as demand slows

Lower prices have triggered a collapse in new investment. This could seed the sows for tighter markets into next decade.