Transcript Global perspective

Natural gas:”bridging fuel “ for the next decades
A global perspective
Marcel Kramer, Chairman and CEO Gasunie, The Netherlands
World Bank’s Energy Week
Washington DC, 6 March 2006
Global trends
• Fuel demand increases steadily
Total Energy Demand by Region 2002 and 2030
3500
3000
Mtoe
2500
2000
1500
1000
500
0
2002
2030
Regional shares in world primary energy demand
100%
22%
39%
80%
49%
16%
60%
10%
9%
40%
62%
51%
20%
42%
0%
1971
OECD
2003
Transition economies
2030
Developing countries
Two-thirds of increase in world demand in 2003 - 2030
comes from developing countries, especially in Asia
Global energy
demand: forecast IEA
Gas demand is expected to grow faster than total
energy demand……
Gas
187
157
159
123
100
118
139
Total primary energy
100
54
Reference year
Index=100
41
1971
Global energy
demand: forecast IEA
2002
2010
2020
2030
Global trends
• Fuel demand increases steadily
• Gas is a relatively low CO2 emittor
Power generation is a major driver of the growth
in gas demand
18000
16000
159
TOTAL PRIMARY ENERGY
139
14000
118
Mtoe
12000
100
10000
Gas
for
Power
8000
6000
54
4000
2000
123
157
187
41
0
1971
2002
Gas for other market segments
Global energy
demand: forecast IEA
2010
2020
2030
gram/kWh
Life-cycle CO2 emissions from Power Plants
1100
1000
900
800
700
600
500
400
300
200
100
0
spread due to type of coal (lignite/hard coal)
and technology (old/new-high-efficiency)
CCGT as Back UP
Sources: life-cycle assessment of electricity generation systems and applications for climate change
policy analysis, Meier, 2002, published on website Nuclear Energy Institute; own data; IEA
Global trends
• Fuel demand increases steadily
• Gas is a relatively low CO2 emittor
• Large world gas reserves
Proven reserves: 6,354 trillion cubic feet .
Shown in 1000 TCF:
16.9
25.7
1.8
2.5
Europe
Russia
North America
4.9
Middle East
4.9
Asia Pacific Region
2.5
Africa
South and Central
America
Current proven gas reserves equivalent of
67 years gas consumption (level 2004)
Data: BP Statistical
Review 2005
Global trends
• Fuel demand increases steadily
• Gas is a relatively low CO2 emittor
• Large world gas reserves
• Increased oil and gas prices
Gas price linkage to oil price
• Gas and Oil remain substitutes in major parts of the
energy market
• Important parts of industry dual-fired
• Large hedging users prefer oil-related gas prices
• Upstream shackles of the gas and oil chains are very
similar
 Gas Prices will remain linked to oil prices, but with
their own volatility
Global trends
• Fuel demand increases steadily
• Gas is a relatively low CO2 emittor
• Large world gas reserves
• Increased oil and gas prices
• LNG projects allow for global competition in gas
LNG
• Gas importing regions will have to compete for supply
• LNG market still small (6,5% of gas is traded as LNG)
• Bottlenecks in LNG-chains till 2008 – 2010
• many large projects in execution phase
• Global price level of natural gas is so high that LNG is
competitive wherever it originates from
• Traditional gas supply patterns (Russian gas to Europe,
Mid Eastern gas to Pacific Rim, North America autarctic)
will give way
Global trends
• Fuel demand increases steadily
• Gas is a relatively low CO2 emittor
• Large world gas reserves
• Increased oil and gas prices
• LNG projects allow for global competition in gas
• Markets develop to more competition and short-term
contracts
Will world gas prices become more aligned?
Benchmark World Gas Prices
$10
US Henry Hub
Japan LNG, Regasified
UK National Balancing Point
Continental Europe Indicator
$9
$8
$ / MMBTU
$7
$6
$5
$4
$3
$2
Source: M. Speltz,
Chevron, sept 2005
05
Ja
n-
04
Ja
n-
03
Ja
n-
02
Ja
n-
01
Ja
n-
00
Ja
n-
99
Ja
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98
Ja
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97
Ja
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96
Ja
n-
95
Ja
n-
94
Ja
n-
Ja
n-
93
$1
Contribution of energy to economic growth
(1980-2001)
Average
annual GDP
growth (%)
Contribution of factors of production and productivity to GDP
growth (% of GDP growth)
Energy
Labour
Capital
Total factor
productivity
Brazil
2.42
77
20
11
-8
China
9.55
13
7
26
54
India
5.57
15
22
19
43
Indonesia
5.05
19
34
12
35
Korea
7.21
50
11
16
23
Mexico
2.19
30
60
6
4
Turkey
3.74
71
17
15
-3
United States
3.24
11
24
18
47
Sources: IEA analysis based on IEA
databases and World Bank (2004).
Conclusions
• Energy supply important driver behind economic growth
• Gas is attractive fuel option
– Low Co2 emissions
– Global market
– LNG opens non-traditional gas markets
– Large global gas reserves
– Rapid growing gas market fosters liquidity and transparency
• Expanding gas infrastructure is pre-requisite for well functioning
global gas market
• This requires a stimulating policy and regulatory framework:
– predictable
– consistent
– transparent