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CEDIGAZ 2035 LNG Outlook – New projects needed after 2023

Posted in LNG Markets, LNG Service, LNG Terminals, Outlook on

GLOBAL OVERVIEW

  • Total effective capacity[1] is expected to increase significantly from 244 mmtpa in 2015 to 387 mmtpa in 2021 (+60%). Subsequently, effective capacity from facilities currently operational or under-construction should progressively decrease to reach 354 mmtpa by 2035 due to the aging of some assets and gas shortages in some producing countries. Demand will struggle to keep up with supply ramp-up at the beginning of the projection period and an over-supply situation should prevail. Rebalancing of the market is not expected before 2023, or even 2024 if probable developments (Fortuna FLNG) and potential upside from currently idle capacity (Egypt, Yemen) are taken into account. After that, the continuous growth of the LNG market will leave a large margin for the implementation of new projects.

    Effective Capacity vs LNG demand

    (1): Equatorial Guine      (2): Egypt, Yemen

  • Three main regions stand out: Asia-Oceania, the Middle East and North America. Effective liquefaction capacity in Asia-Oceania is expected to see a significant increase reaching a plateau between 2019 and 2023 and then decreasing until 2035. Capacity in the Middle East remains broadly stable throughout the period with just over 90 mmtpa of effective liquefaction capacity, although Qatar’s recent announcement calling for a 30% production growth to 2024 could change the game. In North America the stepping up of United States’ LNG will constitute a major upheaval, with a total liquefaction capacity expected to reach 66 mmtpa by 2021 (Canada included).
  • LNG capacity in Africa and the CIS should remain stable after a slight increase at the beginning of the projection period. Stability is also expected in Europe, while effective capacity will gradually decrease in South & Central America due to growing constraints on feedstock as Trinidad and Tobago’s gas reserves dwindle.

    Effective liquefaction Capacity vs LNG demand by region

The rise in coal prices: Beijing policy drives EU coal-to-gas switching

Posted in CEDIGAZ Insights, Country Report, Gas-Coal Competition, Natural Gas Prices on

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.

NATURAL GAS DEMAND WILL PURSUE ITS SHORT AND MEDIUM-TERM GROWTH TRAJECTORY TO 2035, RISING AT A GRADUAL PACE OF 1.6%/YEAR.

Posted in Natural Gas Market, Outlook, Press release on

CEDIGAZ, the International Association for Natural Gas Information, has just released its « Medium and Long Term Natural Gas Outlook 2017 ». This scenario, which incorporates national energy plans, highlights the growing role of natural gas as a key transition fuel towards an increasingly renewable-based, efficient and sustainable energy system. In this scenario, natural gas demand is expected to rise by 1.6%/year over 2014-2035 and its growth in absolute terms will outstrip that of all other energy sources. The strong expansion of LNG supply and the abundance of both conventional and unconventional resources will help gas to expand its role in the energy mix to the detriment of coal and oil. In a context of increased globalization of gas markets and diversification of natural gas supply, spot pricing will be a growing component for the commercialisation of gas. Many countries have policies that should favor gas consumption over other hydrocarbon sources, especially in the power sector. Coal-to-gas switching contributes to a strong decline in the future growth of carbon emissions. However, this will not be enough to reach the +2°C target: emissions in the Cedigaz scenario would put the world closer to a +3°C path.