IEEJ：June 2019 © IEEJ2019

Gas 2019
Keisuke Sadamori, Director, Energy Markets and Security
Tokyo, 13 June 2019
IEA
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2018 was another golden year for gas
Average annual change in global primary energy demand, 2010-18

Mtoe

300

Energy demand

200

Natural gas

100

China
UnitedStates

2010-16

2017

2018

Gas demand jumped by 4.6% in 2018, accounting for nearly 45% of overall demand growth. The United States
led the growth due to relatively low prices and weather, China followed, driven by the push for ‘blue skies’.
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Fast growing Asian markets drive future gas demand
World natural gas consumption growth for selected countries and regions, 2018-24
ChinaMiddle East
Other Asia PacificUnited StatesIndia
AfricaOther North America
South and Central America

Industry
Power generation
Residentialcommercial
Industry andOthersectors
Energy industry own use
Transport

Other Eurasia
EuropeRussia
Japan- 40- 20020

4060

80

100

120

140

160180bcm
bcm

China accounts for over 40% of global gas consumption growth
All sectors contribute to growth, with industry taking the lead in most markets
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LNG emerges as an alternative marine fuelbcm

LNG consumption for maritime shipping by main segment, 2018-24
8
Other
6Cruise ships

4

20Container ships

2018

2019

2020

2021

2022

2023

2024

The growth in LNG as a marine fuel is supported by two main segments – cruise ships and container
ships – which account for 80% of expected consumption by 2024
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The United States leads production and exports growth
Contributors to natural gas production and export growth, 2018-24

United States

Production

0%10%20%

China

30%

United States
RussiaAustralia

Exports

0%10%
United States
RussiaAustralia

40%

50%60%70%

China
Other Eurasia
Other Africa
20%

30%

40%50%

China
Other Eurasia
Other Africa

80%90%100%

Middle East
Egypt
South and Central America
60%70%80%90%100%

Middle East
Egypt
South and Central America

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
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US natural gas production reaches 1 tcm mark by 2024bcm

Natural gas production, United States, 2014-24
1 000
Other sources
Dry shale - otherDry shale - Appalachia
500

Associated shale - other
Associated shale - Permian
Domestic consumption

02014

2016

2018

2020

2022

2024

Associated shale strongly contributes to short-term production growth up to takeaway infrastructure
limits and then slows with lesser LTO growth
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LNG drives global gas trade developmentbcm

Evolution of LNG imports, quarterly volumes and annual averages, 2015-19120100806040200

Q1Q2Q3Q4Q12015
Japan and Korea

Q2Q3Q42016
China

Other Asia

Q1Q2Q3Q4Q12017
EuropeQ2

Q3Q42018
Other regions

Q12019Annual average

Global LNG trade grew at an average 10% per annum in between 2016 and 2018, with strong importincreases from emerging Asian markets, as well as Korea and Europe (in late 2018).
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The United States and China become #1 LNG seller and buyer in 2024

bcm

World LNG trade for a selection of importers and exporters, 2014-24
LNG Exports

LNG Imports
120120

100

100

8080

6060

4040

202002014

2016

2018

ChinaJapan

2020

2022

Europe2024
India

02014

2016

United States

2018

2020

Australia

2022
Qatar

2024
RussiaFast 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*IEA 2019. All rights reserved.

* Considering operating liquefaction plants, projects under construction or with FID as of May 20198IEEJ：June 2019 © IEEJ2019

Europe’s supply gap increasesbcm

Domestic production and contracted pipeline vs import needs, Europe, 2014-24
60050040030020010002014

2016
Domestic production

2018

2020

Long term pipeline contracts

2022

2024

Additional supply needed

Europe needs to source imports to cover one-third of its demand by 2024, due to sharp declines in its
own production & the expiry of pipeline long-term gas import contracts
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Will 2019 mark the beginning of a new LNG investment cycle?

Nameplate capacity (bcm/y)

LNG export projects final investment decisions and announcements, 2016-19
150

150

150

12012012090

909060

60

60

3030

30002014

Canada2015
Indonesia

20162017

2018

Mauritania/Senegal

02019(as of early June)

Mozambique

Qatar

Due to announce
FID in 2019

RussiaUnited States

2018 and early 2019 mark a return to LNG investment growth, with a strong list of additional projects
announced to take FID in the course of the year
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More investment will be needed in LNG capacity before 2024

Liquefaction (available capacity)

105%

500

95%40090%

300

85%

80%

20080%

75%

100

75%

70%

070%

500

95%

40090%

300

85%

200100
2018

2020

Needs

2022

2024

105%
100%

100%

2016

Shipping fleet

700
600

600

0vessels (174 000 m3 eq.)

700

Capacity

2016

2018

2020

2022

2024

Utilisation ratebcm

LNG liquefaction and shipping fleet utilisation rates, 2016-24

Utilisation rate

New investments in liquefaction and shipping will support LNG trade development but additional
capacity will be required to ensure future growth
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Towards a global convergence of natural gas prices?
USD/MBtu

Evolution of natural gas spot market prices, 2014-19
20181614
121086420Europe (TTF)

North America (Henry Hub)Asia (Asian LNG spot)

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
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Pricing remains a challenge in developing marketsbcm

Natural gas consumption and price mechanisms per region, 2018, and growth to 2024
1 200
1 000
8006004002000North America

Asia PacificRegulated prices
Based on IGU, Wholesale Gas Price Survey (2019)

Eurasia

EuropeOil indexation

Middle East

Demand increase to 2024

Central andSouth America

AfricaMarket pricing

Market pricing currently dominates in North America and Europe – but 85% of growth will take place in other regions
Reforms are underway in major developing markets to enable sustainable gas growth
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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 comefrom US LNG and Eurasian pipeline.
• LNG trade remains the main driver of gas market globalisation, and a major source ofincremental supply for Asia and Europe.
• This growth is supported by a rebound in investment, but additional capacity
development will be necessary before 2024.
• Market prices are converging as global LNG trade expands, and the share of marketdriven pricing is increasing in all regions.
• Current gas reforms in major emerging economies are a prerequisite to ensurecompetitive pricing and sustainable growth in the longer term.
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