IEEJ：August 2018 © IEEJ2018

Gas Market Report 2018
Keisuke Sadamori, Director, Energy Markets and Security, IEA
IEEJ, Tokyo, 30 August 2018
IEA
© OECD/IEA 2018

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Context – Gas markets in the next five years
 Gas demand is in the fast lane, thanks to its flexibility & ability to easeenvironmental problems
 Global gas markets are being re-shaped by three major structural shifts
 China becoming the world’s largest natural gas importer US gas production and LNG exports rising dramatically Industry displacing power generation as the leading growth sector

 The gas industry’s future remains bright, but it is not without challenges
 Gas price competitiveness & market reforms in emerging markets
 Curbing methane leaks along the value chain2© OECD/IEA 2018

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Natural gas – life in the fast lane
Growth in global natural gas demand
bcm

120

Industry,buildings &others

9060
Powergeneration

30

2000‐2016average2017

Industry & buildings have taken over from the power sector as the drivers of gas demand;
China accounted for 30% of the increase in global gas demand in 20173© OECD/IEA 2018

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China dominates world gas consumption growth
World natural gas consumption growth for selected countries and regions, 2017-23
bcm-20

020

40

60

80

100120China
Middle East
United States
India
AfricaLatin America
EuropeJapanRussia

Global consumption passes the 4 tcm mark by 2022
China to account for almost 40% of growth driven by clean air policy target
4© OECD/IEA 2018

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China dominates consumption growth400

China’s natural gas supplybcm

350
300
250
200
1501005002013

2015
LNG imports

2017
Pipeline imports

2019

2021

2023

Domestic production

China to become the largest natural gas importer by 20195

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Industry surpasses power generation to lead growth
Natural gas consumption growth by sector (%)

2011-17

Power generation

2017-23

Industry

Residential and commercial

Other sectors

Industry accounts for over 40% of the growth in global gas demand to 2023, mainly on greater use forpetrochemicals and fertilizers
6© OECD/IEA 2018

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The United States takes the lion’s share of the growth in global supply
Natural gas production growth for selected countries and regions, 2017-23
200bcm

150
100
500-50
United States

Middle East

China

Australia

Domestic market

RussiaEgyptEuropeExport market

The United States accounts for almost 45% of global growth in natural gas production and 75% ofgrowth in LNG exports
7© OECD/IEA 2018

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Europe’s supply demand gap increases
Europe’s natural gas balance, 2013-23
100%
90%
o/w LT pipeline contracts

80%
70%
60%

Imports
Netherlands

50%
40%
30%

Other Europe
United Kingdom20%10%0%Norway2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Domestic production decline further accelerates with plan to phase out Groningen field
New options for supply from pipeline and LNG, especially in North West Europe8© OECD/IEA 2018

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Global LNG market reaches 500 bcm mark by 2023

600

LNG imports by region, 2013-23

bcm

500
400
300
200
10002013

2015

2017

Other Asia and PacificJapan and Korea
Other Atlantic Basin and Middle East201920212023

ChinaEurope

LNG trade passes 500 bcm mark by 2023, reaching almost 40% of global gas trade from around a third
today; Developing Asian markets account for almost half of LNG market by 2023
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LNG market to tighten without new investment

6030%

5025%

4020%

30

15%

2010%

105%

00%
2013

2014

2015

2016

Liquefaction capacity addition

2017

2018

2019

Spare capacity (nameplate)

2020

2021

2022

Spare capacity (%)

Liqueaction capacity addition (bcm)

LNG liquefaction capacity and utilisation, 2013-23

2023

Spare capacity (available)

LNG liquefaction capacity is growing faster than demand, but new projects have ground to a halt
10

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Conclusions
 Global demand for natural gas to grow strongly over the next 5 years, led by China
 The United States to become a leading player in LNG markets, driven by a 2nd boomin US gas production
 LNG trade to expand by 30% over next 5 years, underpinning a shift to a morecompetitive, global natural gas market
 New investment will be required along the entire natural gas value chain to provide
flexibility & security of supply
 For the future of gas to remain bright, prices need to stay competitive in emerging
markets & industry needs to continue to improve its environmental performance11© OECD/IEA 2018

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