SUMMARY - Cedigaz - Natural Gas Information - Natural … Reference Scenario: Main trends-5-3-1 1 3 5 7 EU28 United States OECD Asia China India Other non-OECD Asia Middle East CIS

CEDIGAZ, the International Association for Natural Gas

Medium and Long Term Natural Gas Outlook 2016

CEDIGAZ, June 2016

SUMMARY

CEDIGAZ - More than 50 years of gas market

intelligence

� Founded in 1961, 90 members in 40 countries

� Databases (gas statistics, supply contracts, UGS, LNG)

� Annual surveys and thematic studies

� LNG Service, News (CEDIGAZ News Report)

WORLD UGS and LNG Storage

June 2016RECENT STUDIES


� CEDIGAZ Reference Scenario – Methodology

�Global energy trends and the role of gas

� Energy balances and natural gas prospects by main

region and country

�Main global trends in natural gas supply and the role

of unconventional gas

� Prospects for international natural gas trade

� Evolution of CO2 emissions

� CONCLUSION


CEDIGAZ Reference Scenario: Main assumptions


Energy and environmental policy

• No 2°C target but INDCs are assumed to be achieved.

• Cedigaz Scenario brings about a trajectory of CO2 emissions from the energy sector that is consistent with INDCs.

• Only current and planned national energy policies are considered, although some elements of national long term strategic energy plans are viewed with caution and not fully integrated (natural gas and solar prospects in India, nuclear prospects in the MENA).

• CEDIGAZ Scenario incorporates the Clean Power Plan (US) and Europe’s 2030 Climate & Energy Package (40-27-27).

Economy/demographics/pricing

• World economic growth of 3.5%/year over 2013-2035. Strong economic growth in the Middle East, Africa and India.

• Population growth of 0.9%/year (slight decrease in Russia and Japan, but high growths in Africa, the Middle East and India).

• Henry Hub price as a growing component of gas pricing in the long term.

• Globalization of gas markets via a strong expansion of the LNG trade (flexible LNG).

• Oil prices will recover fast and reach $110/bbl by 2035.

• High CO2 price post-2020 (Europe, China).

• Rebalancing of the coal market post-2020.

Technologies

• The Scenario only considers technologies that are already in use at the current time or those that have been approved.

• Increasing technological progress, cost reductions of low-carbon technologies and continued improvements in energy efficiency.

• Policy initiatives stimulating the deployment of low carbon technologies.

• World energy intensity reduced by 42% over 2013-2035 (-2.5%/year), with the largest decrease posted in China (- 4.5%/year).

• Absence of any significant technological revolutions or breakthroughs. Decarbonisation is mostly achieved in the power sector (unlike the transport sector).

� In order to frame its gas demand and supply prospects within a wider energy environment, CEDIGAZ has

made projections on global primary energy demand, which are based on assumptions on the evolution of

the world economy, population, policies and technology.

CEDIGAZ Reference Scenario: Macroeconomic trends

-3

-2

-1

0

1

2

3

4

GDP Population Energy

intensity

Energy

demand

Natural gas

demand

1990 - 2013 2013 - 2035 2014 2020 2035

$/MBtu - $2014

Henry Hub 4.4 4.7 6.2*

NBP 8.3 7.0 10.8

Japan LNG 16.1 10.5 13.8

CO2 – EUA ($/t) 10 21 50

Coal CIF ARA ($/t) 78 95 105

Brent ($/bbl) 99 80 115

Assumptions on pricesMain trends (%/year)

� The economy and energy prices are key determinants of future demand and supply patterns. In CEDIGAZ

Scenario, price developments enable natural gas to expand its role in the energy mix and also stimulate

sufficient investment in E&P and infrastructures to meet rising gas demand.

* This scenario assumes a restricted availability of low-cost US

shale gas resources.


CEDIGAZ Reference Scenario: Main trends

-5

-3

-1

1

3

5

7

EU28 United

States

OECD Asia China India Other non-

OECD Asia

Middle

East

CIS Africa Latin

America

Energy intensity

GDP

Population

Energy demand

Natural gas demand

� Strong slowdown in energy demand growth in China as its industry restructures, which is offset by a

pickup in India.

� No energy demand growth in OECD Asia and a significant reduction in energy consumption in Europe.

� Virtually all of the additional energy is consumed in non OECD countries.

� Emerging economies account for 85% of gas demand growth.

%/year


Prospects for energy consumption by zone and

the role of natural gas

0 500 1000 1500 2000 2500 3000 3500 4000

China

Other non-OECD Asia

US

Europe

CIS

Africa

Middle East

OECD Asia

Latin America

Other North America

Natural gas - 2013 Natural gas - 2035

Other fuels - 2013 Other fuels - 2035

0 1000 2000 3000 4000 5000

Oil

Gas

Coal

Bioenergy

Nuclear

Other renewables

Hydro

2013 Growth in 2013-2035

Unit: Mtoe


Structure of global energy consumption, 2013-2035

29%

32%

21%

5%

2%

10% 1%

Coal

Oil

Gas

Nuclear

Hydro

Bioenergy

Other renewables

24%

26%24%

7%

3%

11%

5%

2013: 13.7 Gtoe 2035: 16.9 Gtoe

Renewables and natural gas are gaining share relative to coal and oil


Prospects for energy balance by region

0

1000

2000

3000

4000

5000

6000

7000

8000

2013 2035

-200

300

800

1300

1800

2013 2035

-300

200

700

1200

2013 2035

0

500

1000

2013 2035

0

500

2013 2035

0

1000

2000

3000

2013 2035

0

500

1000

2013 2035

Unit: Mtoe

Coal

Oil

Gas

Nuclear

Hydro

Bioenergy

Other REN

Growth 2013-2035

Energy: + 1%/year

Gas: + 1.5%/year


Natural gas demand prospects

0

200

400

600

800

1 000

1 200

2014 Growth 2014-2020 Growth 2020-2035Asia-

Oceania

20%

North

America

27%Middle

East

13%

CIS

17%

Europe

14%

Latin

America

5%

Africa

4%

2014

Asia-

Oceania

25%

North

America

23%Middle

East

17%

CIS

14%

Europe

11%

Latin

America

5%

Africa

5%

2035

Unit: Bcm


Natural gas production prospects

Bcm

0

200

400

600

800

1000

1200

14002014

2020

2035


North

America

27%

CIS

23%

Middle

East

17%

Asia-

Oceania

15%

Africa

6%

Latin

America

5%

Europe

7%

2014

North

America

25%

CIS

20%

Middle

East

20%

Asia-

Oceania

18%

Africa

8%

Latin

America

5%

Europe

4%

2035

Unconventional natural gas prospects


� The share of unconventional gas in total supply is expected to grow from 20% in 2014 to 34% in 2035.

Global production

� Unconventional gas provides 68% of supply growth, rising from 704 bcm in 2014 to 1602 bcm in 2035.

Bcm

� The bulk of projected unconventional gas production is in the form of shale gas.

0%

5%

10%

15%

20%

25%

30%

35%

0

1000

2000

3000

4000

5000

2014 2020 2035

Conventional Coal-to-gas

Shale gas CBM

Tight Gas Methane hydrates

Share of unconventional (%)

Conventional

65%

Coal-to-gas

1%CBM

5% Tight Gas

9%

North

America

15%

Asia-Oceania

3%

Other

2%

Shale gas

20%

Total 2035 = 4760 bcm

The growing role of LNG for interregional trade

2014 = 432 Bcm*

2035 = 722 Bcm

LNG

47% Pipeline

53%

LNG

53%

Pipeline

47%

Growth 2014-2035 World gas supply: + 1.6 %/year

Long-distance LNG trade: + 3.1 %/year

Long-distance pipeline trade: + 1.9 %/year

Strategic role of LNG to meet growing external import needs of

Europe and Asia


*Total trade between the seven CEDIGAZ regions (North America, Latin America, Europe, CIS, Africa, Middle East, Asia Oceania),

not including trade within CEDIGAZ regions.

Prospects for the international LNG market

0

100

200

300

400

500

600

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

mm

tpa Potential

Under Construction

Existing

LNG Demand


Effective capacity versus LNG demand

Deferred investment in LNG supply in a low price environment pre-2020

brings a risk of tighter markets in the 2020s.

Prospects for global CO2 emissions and carbon intensity


Comparison of scenarios in terms of CO2 emissions

� In CEDIGAZ Scenario, the growth of global emissions declines more strongly compared to other baseline

scenarios, but emissions remain well above the 2°C path despite the deployment of renewables and

efficiency, as well as coal to gas switching

-2,5

-2

-1,5

-1

-0,5

0

0,5

1

1,5

2

CEDIGAZ

(2013-2035)

BP

(2014-2035)

IEA New Policies

(2013-2040)

ExxonMobil

(2014-2040)

IEA 450

(2013-2040)

Energy demand

Energy-related CO2 emssions

Carbon intensity

%/year

CONCLUSION: Natural gas will play a growing role in a

gradually decarbonising energy system


� The roles for natural gas and renewables continue to

expand.

� Along with efficiency measures, the substitution from coal

and oil to gas and renewables in a more powered energy

system is key to meet environmental challenges.

� Nuclear development, especially in Asia-Pacific and the CIS

also participates to this way.

� Crucial role of energy & climate policies in emerging

markets (institutional reforms, subsidies’ removal).

� US is on a positive path but other markets (EU28, China)

need strong action in the medium term to promote coal-to-

gas switching.

� The environmental advantages and flexibility of gas makes it

a valuable component of a gradually decarbonising

electricity system.

CEDIGAZ Publication

« Medium and Long Term Natural Gas Outlook 2016 »

is available online:

http://www.cedigaz.org/members/gas-market-analysis.aspx

1 & 4 Avenue de Bois-Préau

92852 Rueil-Malmaison Cedex

France

www.cedigaz.org

About CEDIGAZ

CEDIGAZ is an international association with around 90 members in 40 countries. Dedicated to natural gas

information, CEDIGAZ collects and analyses economic information on natural gas, LNG and unconventional gas in

an exhaustive and critical way. CEDIGAZ data has been the industry's reference since its foundation in 1961.

CEDIGAZ

CEDIGAZ, the International Association for Natural Gas

Documents

SUMMARY - Cedigaz - Natural Gas Information - Natural … Reference Scenario: Main trends-5-3-1 1 3 5 7 EU28 United States OECD Asia China India Other non-OECD Asia Middle East CIS