Cedigaz Insights

india's vision to a gas-based economy, drivers and challenges

Prepared for CEDIGAZ by Sylvie Cornot-Gandolphe

PDF format - 16 pages


Thanks to India's rising economy and population, the country's outlook for growth in energy demand is robust.  The role of gas in the country's energy mix, however, is hard to determine. Today, India's primary energy mix is dominated by coal and oil. The role of natural gas is limited: only 6% in 2016.  But the government wants to make India a gas-based economy and raise the share of natural gas in the energy mix to 15% by 2022, although the timing remains uncertain. This paper analyses gas demand trends in India by 2025-30 and draws on two reports recently published by the Oxford Institute for Energy Studies (OIES) and the Bureau of Economic Geology (BEG)/Centre for Energy Economics (CEE), University of Texas.

Gas consumption in India is driven by five sectors: fertilizer (34% of total gas demand in fiscal year 2015-16), electric power (23%), refining (11%), city gas distribution, including transport (11%), and petrochemical (8%) industries. In 2016, after five years of consecutive declines, gas consumption increased to 55 bcm, boosted by sales to city gas distribution mainly. The country faces a widening gap between indigenous gas production and demand, which is met by increasing Liquefied Natural Gas (LNG) imports. LNG imports surged by 34% over 2015 to 25 bcm in 2016, making India the fourth largest importer in the world. Read more

the rise in coal prices: beijing policy drives EU coal-to-gas switching

Prepared for CEDIGAZ by Sylvie Cornot-Gandolphe

PDF format - 23 pages (July 2017)

Despite a decline in global coal demand for the second consecutive year, international steam coal prices doubled in 2016. This massive rise may seem paradoxical; in fact, it responded to market fundamentals: a tightening of the international market due to an unexpected surge in Chinese coal imports and the inability of exporters to meet this sudden increase. The surge in Chinese imports was not due to increasing demand – Chinese coal consumption in 2016 fell for the third year in a row– but to domestic production restrictions mandated by the Chinese government from April 2016. To remove excessive and outdated capacities in the domestic coal sector, that weighed on domestic coal prices, the government required coal mining companies to cut operating days from 330 to 276 a year. The new regulation led to a fall in coal production, shortages of coal and a steep increase in domestic coal prices, forcing power utilities to turn to the international market. However, after five years of low prices and reductions in investment, exporters were not able to respond to this sudden demand and international prices increased to clear the market. Read more

Overview of underground gas storage in the world 2017

Prepared for CEDIGAZ by Sylvie Cornot-Gandolphe

PDF format - 16 pages


As of end 2016, there were 672 underground gas storage (UGS) facilities in operation in the world, representing a working gas capacity of 424 billion cubic meters (bcm), or 12% of 2016 world gas consumption. The number of storage facilities has decreased (680 UGS in 2015), mainly due to closure/mothballing of UGS in the United States and Europe. However, the global working capacity has slightly increased (+11 bcm) driven by expansions in the Commonwealth of Independent States (CIS), the Middle East and China. In Europe, storage capacity has continued its decline. Working gas capacity decreased by 5.8 bcm due to the closure of storage facilities in Germany, Ireland and the UK. The temporary closure of the Rough depleted field was confirmed as a permanent one in June 2017. This sharply reduces the UK storage capacity, and especially its seasonal storage capacity.

Global peak deliverability rates slightly decreased to 7,126 million cubic meters per day (mcm/d) as of end 2016, down 2.6% from 2015. The decline is linked with the closure of European UGS. Read more

Does lng have a long-term future in the united arab emirates?

Prepared for CEDIGAZ by Fatima Sadouki

PDF format - 30 pages - Price list (one license, VAT excluded):
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The United Arab Emirates (UAE) is one of the world's longest-established LNG exporters. But despite holding the world's sixth largest gas reserves, LNG imports into the federation increased at an impressive rate since 2010, when the Jebel Ali floating terminal in Dubai started up.  With gas representing more than 90% of the power fuel mix, LNG purchases have been key to fill a widening supply deficit in order to match rapidly growing gas-to-power demand. Today, LNG remains at the heart of the UAE's strategy to meet rising energy consumption and support economic and industrial expansion in times of reduced oil income and budgetary constraints. Cedigaz's latest report examines the risks and opportunities inherent to this strategy and asks whether it is viable in the medium to longer term.Read more

POST COP21 - WHAT DOES THE FUTURE HOLD FOR GAS IN SOUTHEAST ASIA?

Prepared for CEDIGAZ by Sylvie Cornot-Gandolphe

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Controlling greenhouse gas (GHG) emissions and other environmental impacts while ensuring safe and affordable energy for all are the major challenges faced by Southeast Asia. To respond to these challenges, the Association of Southeast Asian Nations (ASEAN) is increasing the share of renewable energy sources in its energy mix and implements measures to reduce its energy and carbon intensity. Surging energy and electricity needs mean that fossil fuels will continue to dominate the energy and electricity mix by 2040. While natural gas is an ideal fuel to reduce the environmental footprint of power generation, competition with coal, stagnation in gas production, lack of adequate infrastructure, have been major barriers to its increased use so far. Southeast Asia has turned to coal instead, which has been the fuel of choice for power generation in the past ten years due to its low cost and ample availability in the region. But as electricity demand is expected to continue surging, and with a growing concern over air pollution and CO2 emissions, the dominance of coal in the Southeast Asian power sector is increasingly called into question.   Read more

A lot of hot air?

To what extent could gas lose ground in the heating market in Europe

Prepared for CEDIGAZ by Nick White and Ben Madden

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According to the latest CEDIGAZ report, the gas for heating market in Europe, for many years a stable and growing demand source, is on the cusp of significant change, which is likely to lead to major declines over the coming decades. Key uncertainties remain over the pace and extent of these declines, and gas utilities would be well advised to prepare for changes by involvement in district heating and other technologies which maintain gas as part of a lower carbon heating future.

Natural gas is the dominant fuel for heating residential and commercial properties in the EU, providing 47% of both input energy and useful heat in 2013. However, gas for heating faces major challenges in coming decades due to calls for greater energy efficiency and decarbonisation of the heating sector. Although, in the mid-term , expansion of CHPs and DHNs provide some opportunities for gas,  long-term forecasts show gas demand for heating declining over the period to 2050, but there are significant variations in the future levels from a business as usual scenario which sees gas demand at 165 bcm in 2050 (compared to 195 bcm in 2013) to a high energy efficiency scenario which at only 44 bcm. Read more

subsidy - blessing or curse?

An Assessment of Impact of Gas Price Subsidies on Gas Markets and Consumers

Prepared for CEDIGAZ by Nick White and Ben Madden

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Gas price subsidies have a significant effect on the gas consumption. Simply put they embody the inexorable link between the price of a good and its demand. By artificially lowering the price of gas, it can become more competitive as a fuel, potentially even crowding out other fuels or technologies, as well as encouraging excessive consumption that would not have occurred in the absence of subsidies. The extent to which either of these situations are the case is dependent on the subsidies of a given country with two particular factors; price/level of discount and how much of the population it is available to. The cheaper the gas the more widespread and heavy its use (or the use of a byproduct of gas such as electricity, heat or water) will be. Additionally if subsidies are extended to larger parts of the population then not only does that increase the amount of users whose consumption may be wasteful but it also extends cheaper gas to richer households who are typically higher consumption users and therefore capable of wasting more. It therefore follows that any countries wishing to reduce or cut their subsidies will likely see their gas demand fall.   Read more

U.S. Natural gas update and outlook

Prepared for CEDIGAZ by Michelle Michot Foss, PhD.

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The oil price decline has left American producers in a situation like that of 2009 following the collapse of the Henry Hub gas prices. At the time, shale gas production was growing fast but demand was depressed due to the effects of the subprime mortgage crisis. Producers reacted by redirecting their investments towards liquid-rich deposits (containing oil or natural gas liquids) and were thus able to benefit from the oil price recovery. This strategic reorientation did not penalize gas production, which continued to grow, thanks to the gases associated with oil production which, in recent years, have been responsible for almost all growth in gas production. Today, more than 50% of the shale gas produced in the United States comes from liquid-rich deposits. Consequently, any decrease in liquids production occurring in reaction to falling oil prices is bound to have major repercussions on domestic gas production.

U.S. Natural Gas Update and Outlook*,  analyzes the consequences of the oil price decline on the U.S. oil and gas sector as well as the implications for production and hydrocarbon prices. Read more

Russian Gas Market: Entering New Era

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Prepared for CEDIGAZ by Tatiana Mitrova and Gergely Molnar

After a period of extensive growth in the 2000s, the Russian gas industry is now facing numerous challenges. Mounting competition by independent producers and the development of new production by Gazprom, combined with stagnating domestic demand and weakening export markets, have created a situation of overproduction, made worse by western sanctions and low oil and gas prices. Expansion to the East thanks to the recent China deal is not expected to provide much relief before 2024. The coming decade will be critical for the industry and its outcome will largely depend on the government's pricing and institutional policies but the role of the state should remain essential.

The New CEDIGAZ report “Russian Gas Market: Entering New Era” by Tatiana Mitrova (Russian Academy of Sciences) and Gergely Molnar analyses the ongoing changes in the Russian industry and the challenges to be met. "Read more"

Japan's new energy policy: in search for stable and competitive energy supply (november 2014)

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Prepared for CEDIGAZ by Sylvie Cornot-Gandolphe

Japan's energy policy is undergoing fundamental changes. The accident at TEPCO's Fukushima Daiichi nuclear power plant questions the future contribution of nuclear power in the national energy mix. Growing imports of fossil fuels to replace the lost nuclear capacity inflated energy prices and raise economic and energy security challenges. At the same time, the US shale gas and oil revolution is reshaping the global energy scene. Japan expects to take advantage of the trend to eliminate the “Asian premium” on natural gas prices and expand cheaper natural gas consumption. These developments have driven the Government of Japan to review its energy policy from scratch and adopt a new Strategic Energy Plan. This new policy has far reaching implications for gas and coal development in Japan but also for the international markets as Japan is the world's largest LNG importer and the second largest coal importer.  "Read more"