global gas markets – growth and challenges
TRANSCRIPT
© 2015 IHS
ihs.com
IHS
Global Gas Markets – Growth and Challenges
The International Gas Union Council Meeting, Cartagena, Colombia
Edward Kelly, Managing Director, IHS Energy, [email protected]
An IHS Presentation for -
22 October 2015, Cartagena
ENERGY
© 2015 IHS
Key messages
• The global gas market is encountering numerous challenges in an overall growth context. Whether the current weakness is cyclical (the IHS view) or structural remains to be seen.
• LNG developers are in a competitive game of ‘musical chairs’
• Lower oil prices make project development more challenging
• US Lower-48 projects remain commercially competitive and most easily executable
• Producers need new business models and applications in order to monetize growing global gas reserve inventories
• Contract and trading structures are evolving
Source: IHS Energy
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© 2015 IHS 3
Supply and demand drivers for LNG are moving in opposite directions
One year ago, we saw supply exceeding demand. This tension is increasing
© 2015 IHS: 51007-1 Source: IHS
LNG DEMAND
LNG SUPPLY
© 2015 IHS 4
Macro – The Economy, Oil, and COP-21
© 2015 IHS
World economic growth outlook—not bad but…
5
-1,8%
4,3%
3,1%
2,6% 2,5% 2,8%
2,5%
3,1% 3,4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
2009 2010 2011 2012 2013 2014 2015 2016 2017
World real GDP growth rates, 2009–17
Notes: Global GDP growth calculated using real local currency growth rates, aggregated using real exchange rate-based weights. Source: IHS © 2015 IHS
Perc
ent g
row
th in
real
GD
P
© 2015 IHS
Key messages for the global crude oil market: Q3/4 will be stress point for oversupplied market • Low prices are imperiling high cost non-OPEC supply, but impact will be
slow.
• There is little pressure – yet - for Saudi Arabia and its Gulf allies to change their market share production policy, particularly given the possible Iran deal. However, chatter of a reversal in OPEC strategy could support prices temporarily.
• If WTI stays below the $45/bbl level, as we expect, then US production will slow sharply in the next few months, but news-driven price rallies in paper markets could delay the balancing of the markets beyond mid–2016.
• China’s economic and stock market stumbles have taken bullishness out of some demand forecasts. IHS has consistently held that Chinese demand will slow in the second half of 2015 but will still account for significant growth. • about 413,000 b/d of demand growth in 2015, 287,000 b/d in 2016.
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Annual global demand growth improves but supply overhang remains through 2016
$0
$20
$40
$60
$80
$100
$120
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$ /
bbl (
nom
inal
)
Change from previous year in world oil supply and demand
Notes: Annual changes are changes from the previous year. Liquids demand includes LPG and biofuels. Liquids supply includes natural gas liquids and biofuels. © 2015 IHS
Milli
on b
arre
ls p
er d
ay
Brent price (right scale)
Demand Supply
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25
50
75
100
125
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040
Brent Constant, 1st Quarter 2015 WTI Constant, 1st Quarter 2015
IHS Brent & WTI Long Term Price Price Tracks (Constant Dollar)
Source: IHS © 2015 IHS
Dol
lars
per
Bar
rel
Current Over Supply Environment
Recovery Period
Over Supply Mini-Cycle
Long Term New Development Equilibrium Level
Note: Brent-WTI price relationship assumes liberalized export of US crude oil by 2017
Long term real oil prices reverts to $100/bbl+ by next decade, supporting marginal supply
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LNG Market Trends
© 2015 IHS
Global gas snapshot, October 2015
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Key regional trends shaping the LNG market
© 2015 IHS
China slowdown and strong coal competition
across Asia
‘Residual market’ for LNG
Henry Hub-based LNG exports lead post Australian wave
LNG imports for power
Growing LNG dependence Supply surge
hitting the market
Nuclear policy uncertainty
East Africa stuck on
starting blocks
Russia’s drive for LNG and pivot East Canadian LNG
stuck on starting blocks
Gas Long
Gas Short
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Short-term LNG supply growth
243 248 268
296 318
338 355
0
50
100
150
200
250
300
350
400
2014 2015 2016 2017 2018 2019 2020
Africa Southeast Asia Other PacificAmericas Middle East Europe
Short-term LNG supply growth
Note: Other Pacific includes Australia, Russia, Peru, Canada, and Papua New Guinea. Source: IHS Energy © 2015 IHS
MM
t
-10
-5
0
5
10
15
20
25
30
35
2015 2016 2017 2018 2019 2020
Africa Southeast Asia Other PacificAmericas Middle East Europe
Incremental short-term supply growth
Source: IHS Energy © 2015 IHS
MM
t
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Short-term LNG demand growth
0
50
100
150
200
250
300
350
400
2014 2015 2016 2017 2018 2019 2020Europe JKTLatin America Middle East & North AfricaNorth America Other AsiaSub-Saharan Africa Other
Short-term LNG demand growth
Source: IHS Energy © 2015 IHS
MM
t
-10
-5
0
5
10
15
20
25
30
35
2015 2016 2017 2018 2019 2020
Europe JKTLatin America Middle East & North AfricaNorth America Other AsiaSub-Saharan Africa Other
Incremental short-term demand growth
Source: IHS Energy © 2015 IHS
MM
t
© 2015 IHS
Market opportunity gap: can new projects compete with existing contract extensions?
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230 250 275 282 294 297 304 301 281 272 256
17 18
23 33
32 38 39 47 66 74 90
0 3
6 8
13 13 15 15 15 15 17 2 2 5 18 32 44
150
200
250
300
350
400
450
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Contracted Supply Existing: Un-contracted SupplyUnder Construction: Uncontracted Supply Opportunity GapGlobal Demand
Contracted supply and viable un-contracted supply vs. global LNG demand
Source: IHS Energy, Sept 2015 © 2015 IHS
MiM
tpa
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Room for only one in 15 projects Gas market outlook / September 2015
China and India Other Asia-Pacific Europe
Other Committed*
North America
Australia Russia
0
200
400
600
800
1 000
1 200
2014 Demand IncrementalDemand to 2025
Supply fromRetiringCapacity
Extra LNGCapacityNeeded
Potential NewLNG Supply
Projectsby 2025
IHS LNG supply and demand outlook to 2025
Notes: Including projects sanctioned in 2014 Source: IHS Energy © 2015 IHS
MM
t per
yea
r
2025 opportunity about 60 MMt
© 2015 IHS 15
Future supply additions most likely to come from US and floating projects
Achieved and projected FIDs, 2015-2017
Project Capacity (MMtpa) Country Year
Achi
eved
Freeport LNG T3 4.4 United States April 2015
Corpus Christi LNG T1-2 9.0 United States May 2015
Sabine Pass LNG T5 4.5 United States July 2015
Con
ditio
nal Cameroon FLNG 1.2 Cameroon 2015
Pacific NW LNG T1-2 12.0 Canada June 2015*
Pro
ject
ed
Elba Island 2.5 United States 2016
Douglas Channel FLNG 0.6 Canada 2017
Bor
der-
line Mozambique (Area 1) T1-2 12.0 Mozambique 2017-18
Wild
card
Fortuna FLNG 2.2 Equatorial Guinea ---
Coral FLNG 2.5 Mozambique ---
Magnolia LNG T1 2.0 United States ---
Jordan Cove T1-4 6.0 United States ---
Note: PETRONAS reached a conditional FID on Pacific Northwest LNG in June 2015, but still needs to reach a final FID.
14 14
24 22
28
50
4
14
5
22
9
27 24
29 28
19,1
0
5
10
15
20
25
30
35
40
45
50
2000 2002 2004 2006 2008 2010 2012 2014Middle East Australia United StatesOther Pacific Other Atlantic Forecast (high case)
Sanctioned LNG capacity
Source: IHS Energy
MM
tpa
©2015 IHS
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North America: The largest source of new LNG supply? Gas market outlook / September 2015
Regasification facilities and potential liquefaction projects in US Lower 48 and Canada*
© 2015 IHS
41102-3_0120 Notes: *New projects not included in this map: Live Oak LNG, G@ LNG, Por Arthur LNG, Rio Grande LNG in the US gulf Coast; and North Shore LNG and NewTimes Energy LNG in Canada Source: IHS Energy
Existing regasification
Potential export site
Existing regasification And potential export site
Under construction export site
© 2015 IHS 17
North American LNG projects actually expected to move to completion
Gas market outlook / September 2015
North American regasification facilities and advanced liquefaction projects
© 2015 IHS 40802-1B_02 11 Source: IHS Energy
© 2015 IHS
North American LNG exports in the current outlook
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Gas market outlook / September 2015
0
2
4
6
8
10
12
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Canada capacity Canada volumes US lower-48 capacity US lower-48 volumes
US lower 48 and Canada liquefaction capacity and exports
Source: IHS Energy © 2015 IHS
Bcf
/d
© 2015 IHS
The gas price is defined by the tension between rapid demand growth, and the strong resource base. Demand growth supports higher natural gas prices, but still under $4 per MMBtu until late 2021
$2,50$3,00$3,50$4,00$4,50$5,00$5,50$6,00$6,50
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Jan-20
Jan-21
Jan-22
Jan-23
Marginal cost range 2 Marginal Cost RangeHenry Hub IHS forecast, September 2015NYMEX, 14 September 2015
September 2015 Henry Hub history and forecast
Notes: MMBtu = million Btu. Source: IHS, CME, Intelligence Press © 2015 IHS
$/M
MB
tu
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Gas market outlook / September 2015
OUTLOOK
Real averages 2010–15: $ 3.77
2015–20 $ 2.94
2021–30: $ 3.63
2031–40: $ 4.21
Source: IHS © 2015 IHS
IHSTM
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ENERGY
Ed Kelly
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