Slides used at the launch of the International Energy Agency's (IEA) new edition of the Medium-Term Gas Market Report (MTGMR), for 2013. The launch event was held at the International Economic Forum in St. Petersburg, Russia on June 20, 2013.

1. Launch Event: St PetersburgLaunch Event: St Petersburg
International Economic Forum
Laszlo Varro
Head, Gas Coal and Power MarketsHead, Gas Coal and Power Markets
© OECD/IEA 2013

2. Gas slows down but still expands its role
 Global gas consumption grows at 100 bcm/year,
or a Russia in 5 yearsor a Russia in 5 years.
 5 year growth revised down by 70 bcm, due to
EU demand and Middle East/Africa supplyEU demand and Middle East/Africa supply
 At 2.4%/year, gas is growing faster than oil or
overall energy use but continues to fall behindoverall energy use but continues to fall behind
coal
 Transportation emerges as a major demand p g j
driver, accounting for 10% of gas demand
growth, driven by China and the United States
© OECD/IEA 2013

3. The United States continues to dominate non‐
conventional developmentp
 Technological
improvements in
CANADA
Bakken
improvements in
seismic, drilling and
fracking
Antrim
New Albany
Uinta (CBM)
Piceance (CBM)
Powder River (CBM)
UNITED STATES OF AMERICA
Niobrara
g
 “Mass
manufacturing”
San Juan (CBM)
Raton (CBM) Marcellus
Devonian
Utica
Fayetteville
Barnett
Haynesville
Eagle
Monterey
Woodford
Barnett/
Woodford
g
methods in oil field
services
Eagle
Ford
Basin
Shale gas production
This map is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
MEXICO
 Strong financial
boost from liquids
© OECD/IEA 2013
With US markets saturated, Canadian production growth
depends on LNG exports

4. Recovery of gas prices causes a blip
in the march of gasin the march of gas
2000
Gas and coal fired power generation in
the US, historical and projected
Twh
1400
1600
1800
800
1000
1200
200
400
600
coal gas
In the absence of constraints on coal‐plant operation power‐sector
0
00
2010 2011 2012 2013 2014 2015 2016 2017 2018
© OECD/IEA 2013
In the absence of constraints on coal‐plant operation, power‐sector
emissions increase by 120 million tons, despite shale gas

5. Security issues, depletion and domestic demand
growth lead to tight LNG supply
LNG liquefaction plants
i h li i l i biliwith political instability
with declining gas output
with surging domestic demand
© OECD/IEA 2013
Supply shortfalls double the market impact of
Japanese demand increase

6. New LNG supply is predominantly
backed by long‐term contractsbacked by long term contracts
140
160
bcm
80
100
120
140
20
40
60
80
0
20
2013 2014 2015 2016 2017 2018
Portfolio LNG The rest of the world Other Asia
Portfolio LNG and secondary re‐exports both play an
increasing role
China Japan Capacity
© OECD/IEA 2013
increasing role

7. Project timing and cost management:
will we ever hear good news?will we ever hear good news?
4 500
USD/tonne Investment costs of LNG projects
2 500
3 000
3 500
4 000
0
500
1 000
1 500
2 000
0
Completed project Project under construction Cost increase after FID
Persistent cost inflation and oil indexed contracts put LNG
© OECD/IEA 2013
Persistent cost inflation and oil‐indexed contracts put LNG
at a disadvantage to coal across Asia

8. Projects in advanced stage could transform the US into the
number 3 LNG exporter (after Qatar and Australia)
50
60
iCameron
BCM
40
50
to
Japan Cove Point
RussiaCameron
Contract
signed
20
30
DOE
Freeport
Egypt
Algeria
10
20
ApprovedSabine
Pass
Oman
Yemen
0
Projects with DOE approval or signed export contracts LNG from other countries
Oman
© OECD/IEA 2013
Japanese utilities have signed contracts equivalent to the
post‐Fukushima demand increase

9. Gas can’t beat coal unless it beats it in China
700
Mtoe
Five year incremental consumption
500
600
(MTCR2012, MTGM2013)
300
400
100
200
0
China RoW
Coal Natural gas
© OECD/IEA 2013

10. China: air quality is emerging as the key
question and gas is the answerquestion and gas is the answer
Every year till 2018
 New gas heating in 3 5 New gas heating in 3.5
million homes
 7 million tons of
industrial coal
consumption replaced
by gasby gas
 A new CCGT in every 6
weeks (but a new coal
)plant every week)
China adds the combined gas demand of Germany,
© OECD/IEA 2013
France and Belgium in 5 years, equivalent to 27% of
global demand growth

11. Chinese non‐conventional gas developments can
not keep up with demand
•Complex geology
•Population density inPopulation density in
Sichuan, water scarcity in
Tarim/Ordos
•Open regulatory issues•Open regulatory issues
•Large investments in coal
gasification (25 bcm by 2018)
China adds almost the gas output of the Netherlands, but
with only 100 shale wells so far the shale ramp up is
© OECD/IEA 2013
with only 100 shale wells so far the shale ramp‐up is
beyond 2020

12. China adds the current German
imports to its import needimports to its import need
 Myanmar imports
remain upstreamremain upstream
constrained
 Russian imports Russian imports
unlikely before 2020
 Central Asia: Central Asia:
expanding
infrastructure but
high prices
China absorbs all the production increase in Central Asia
© OECD/IEA 2013
China absorbs all the production increase in Central Asia
and one third of the global increase of LNG supply

13. Russian gas: the East is the manifest
destiny?destiny?
•Production constrained by EU and domestic demand
•Surging independent production backed by NGLs
Source: Gazprom
© OECD/IEA 2013
•Asian exports depend on capital‐intensive infrastructure

14. Japan: nuclear restoration stabilizes LNG
demand and eliminates demand rationingg
400
Gas fired and nuclear power generation
in Japan, historical and IEA assumptionsTWh
300
350
200
250
gas
nuclear
50
100
150
0
50
2010 2011 2012 2013 2014 2015 2016 2017 2018
© OECD/IEA 2013
Projected nuclear restoration is equivalent to a 45
billion dollars Australian LNG project

15. Policy‐driven decommissioning of old coal
plants enables gas to recoverp g
Gas plant utilization remains below the level
© OECD/IEA 2013
Gas plant utilization remains below the level
expected at the time of investment

16. Broad range of obstacles to shale
developmentdevelopment
© OECD/IEA 2013

17. Shale gas in Europe: ramping up by a factor of 100?
80
Shale well drilling
201360
40
20
2012
0
Poland Eagle Ford in a typical week in 2012
© OECD/IEA 2013

18. Natural gas in transport has a bigger impact on oil
demand than biofuels and electric cars combined
 Traditionally
concentrated in Iran,
Pakistan, India,
Argentina and Brazil
 Shale gas revolution in
the US
d d Stranded gas resources
 Oil dependency
concerns
 Emission advantages
© OECD/IEA 2013
Transport sector use absorbs 10% of the growth of gas
production

19. US: rolling out the infrastructure
 Increasing market share
for CNG buses
 B d f LNG Broad range of LNG
trucks is becoming
available
 Large investments in
infrastructure
T h l i l Technological progress
in refilling and small
scale liquefactionSource: Clean Energy Fuels
 Watch out for railroads
Source: Clean Energy Fuels
© OECD/IEA 2013
Due to infrastructure costs, after the rollout, the wholesale
gas price will have little impact on competitiveness

20. Despite import dependency and slow ramp
up of shale, China goes for gas in transportp , g g p
 Concerns about
particulate emissionsparticulate emissions
 Large concentrated
mass transit systemsmass transit systems
 Simultaneous rollout
of pipeline andof pipeline and
refilling infrastructure
© OECD/IEA 2013
The ramp‐up of gas as a transport fuel in China is 4 times
the growth of the US

21. Launch Event: St PetersburgLaunch Event: St Petersburg
International Economic Forum
Maria van der Hoeven
IEA Executive Director
© OECD/IEA 2013