IEEJ：July 2016 © IEEJ2016

IEA Medium-Term Gas
Market Report 2016

Keisuke Sadamori
Director, Energy Markets and Security
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IEEJ：July 2016 © IEEJ2016

Growth in global gas demand slows
Change in world natural gas demand
600
2.5 %

1.5 %

2009-152015-21

500

bcm

400
300
200
100
0
Change in total gas demand

Change in per cent

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
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China drives increase in global gas demand,as the United States takes a back seat
Change in natural gas demand by region (bcm)
150bcm10050
0-50-100
ChinaMiddle EastUnited States
2009-15

India

EU

Korea andJapan

2015-21

US gas demand growth slows sharply, driven by stagnation in the power sector;
EU gas demand gradually recovers on coal & nuclear power plant retirements
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Growth in gas production is led by theUnited States and Australia
Change in natural gas production by region (bcm)200150bcm

100500-50-100
United States

Australia

Qatar
2009-15

ChinaRussia

ASEAN

EU

2015-21

The United States & Australia take over from the more establishedexporters – Russia, Qatar & ASEAN – as the main source of production growth4© OECD/IEA 2016

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US gas production stagnates in 2016 but arecovery is expected
80

80.00

60

60.00

40

40.00

2020.00

bcm

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

00.00- 20-20.00- 40-40.00- 60-60.00- 80-80.00

20112012

2013

2014

2015

LTO associated gas2016

2017

Marcellus+Utica

2018

2019

Others2020

2021

TotalLow prices have impacted US gas production; but as market balances tighten &prices gradually recover, robust growth is set to resume
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Greater competition is coming to theEuropean gas market
US LNG is competitive in Europe

12USD/Mbtu

1086
4
20
2013
European hub prices (TTF)

2015

2017

Henry Hub indexed LNG delivered to Europe

Oversupply in global LNG markets will intensify competition; flexible US LNG
volumes are well-placed to compete in Europe6 Nb: Based on cash costs and on forward curves as of June 7th 2016

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Global LNG export capacity increases
sharply
Liquefaction capacity additions
200bcm

160
120
80
400
2009-15Australia

2015-21
Qatar

U.S.

Others

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 recover7© OECD/IEA 2016

IEEJ：July 2016 © IEEJ2016

Developing Asia emerges as key engine ofLNG import growth
Change in LNG imports by region (bcm)
160bcm

120
80
40
0-40
2009-15

India

China

2015-21

Other developing Asia

EUKorea + JapanAs 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
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Gas security: No time for complacency

Russian-Ukrainian conflict2006/2009/2014

UK 2006/ 2010/2013

Katrina & Rita Polar Vortex
2014-2015
2005

Egypt/Sinaï
2011-2015

Algeria
2013/2016

Pakistan
20112015

India-Nepal
2015

Libya 2011-2013
Egypt
2014

Cross border supply cut

Nigeria 2014-2016

Japan 2011

Yemen
2012-2016

Terrorist attack - sabotage
Angola 2014

Natural disasterTechnical disruption

Argentinian Chile 2004
Argentina
2004-2015

Shortages &infrastructure bottlenecks

The amount of LNG capacity that is out of service has almost tripled over the past
four years, highlighting security & investment challenges in key producer countries
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Investment in new LNG export capacity
has ground to a halt
Final investment decisions in liquefaction capacity by year
50bcm

4030
20
100201120122013

2014

2015

2016 (to date)

The collapse in investment increases the risk of tighter markets in the next decade;concerns about gas supply security could quickly re-emerge
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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 amountof LNG export capacity is coming online just as demand slows
 Lower prices have triggered a collapse in new investment

 IEA is taking on a new mandate on gas security – low prices & well

supplied markets give no cause for complacency

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Contact :report@tky.ieej.or.jp© OECD/IEA 2016