Global Gas Market and its

Challenges
ROBERTO ARENAS LARA, PHD
HEAD, DATA AND INFORMATION SERVICES DEPARTMENT
GAS EXPORTING COUNTRIES FORUM

Santa Cruz de la Sierra, Bolivia

Contents
 Introduction of the Gas Exporting Countries Forum (GECF)
 Global Abundance of Natural Gas Resources
 The Stable Supply of NG Needs Sufficient Investment
 Global Energy Demand
 Global Natural Gas Demand
 The Glut in LNG market: From forecast to reality
 The role of Natural Gas in a sustainable energy future
 Challenges facing the Natural Gas industry
 GECF Member and Observer Countries

MEMBERS
OBSERVERS
Algeria Trinidad
and Tobago
Azerbaijan
Bolivia United Arab
Emirates Iraq

Egypt
Venezuela
Kazakhstan
Equatorial
Guinea

Netherlands
Iran

Libya Norway

Nigeria
Oman

Qatar
Peru
Russia
 GECF’s Vision and Mission
VISION MISSION

“ To d e v e l o p a n d r e f l e c t c o m m o n v i e w s a n d u n i f i e d
positions, positive influencing direction of the global gas
market by promoting natural gas as the fuel of choice in
t h e g l o b a l e n e r g y m i x b a s e d o n i t s a v a i l a b i l i t y, r e l i a b i l i t y,
v e r s a t i l i t y, a f f o r d a b i l i t y a n d i t s i n h e r e n t n a t u r e a s a n
e n v i r o n m e n t a l l y - f r i e n d l y s o u r c e o f e n e r g y. ”
“ To s u p p o r t t h e s o v e r e i g n r i g h t s o f M e m b e r C o u n t r i e s
over their natural gas resources, to maximize their
value for the benefit of their people, and to promote
their coordination on global energy developments with a
view to contributing to global sustainable development
a n d e n e r g y s e c u r i t y. ”

PRIORITY OBJECTIVES
1 ) M a x i m i z i n g G a s Va l u e : t o p u r s u e o p p o r t u n i t i e s t h a t s u p p o r t t h e s u s t a i n a b l e m a x i m i z a t i o n o f t h e a d d e d v a l u e o f g a s
for Member Countries.
2) Developing the GECF View on Gas Market Developments through short-, medium- and long-term market analysis
and forecasting.
3) Co-operation: to develop effective ways and means for cooperation amongst GECF Member Countries in various
areas of common interests.
4) Promotion of Natural Gas: to contribute to meeting future world energy needs, ensuring global sustainable
development and responding to environmental concerns, in particular with regard to climate change.
5) International Positioning of the GECF as a globally recognized intergovernmental organization, which is a gas
market expertise reference institution and a benchmark for gas exporting countries.
GECF Publications, Outputs &
Collaborations
 Gas Daily News Briefs
 Annual Short-Term Outlooks (presented to GECF Ministerial Meetings)
 Annual Statistical Bulletin
 Workshops on gas market developments and cooperation
 JODI-Gas World Database
 Reports (e.g. LNG shipping industry; digitalization in the gas industry;
unconventional gas developments; investments; country profiles; role of
natural gas in the global climate agenda).
 Symposiums on Energy Outlooks
 International Seminars
 Conferences and international forums: e.g. IAEE, UNFCCC, UNECE
GECF Global Gas Outlook
 A reliable source and reference for
insights into the gas industry
 Based on the GECF Global Gas
Model (GGM), a uniquely granular
energy model developed in-house,
which encompasses:
o 113 country-level forecasts
o 4300 gas supply entities
o An infrastructure database with
over 5000 pipeline and shipping
routes
o A gas contracts database with
more than 1000 company-to-
company contracts
Abundance of Global Natural Gas
Resources
Total Natural Gas resources by type (bcm) Total Natural Gas reserves (%)
74984
138931 16%
30%
30%

104473
22%
5% 65%
96597
21% 50512
11%
Conventional-Existing Projects Conventional-New Projects GECF Members GECF Observers Non-GECF
Unconventional - Existing Unconventional - YTF
Conventional - YTF

Source: GECF Global Gas

 The world possesses an ample amount of natural gas, totalling 465 TCM. Outlook 2040 (2017 edition)
More than 200 TCM are identified as proven conventional reserves.
 The current resource to production ratio is about 60 years for proven reserves
(including existing projects, new projects, and unconventional reserves) . This
figure represents 130 years for the total resource base (including YTFs).
 The Stable Supply of NG Needs
Sufficient Investment
Capacity and Year of FID of New LNG Projects

• Sufficient investment in Natural Gas

industry will guarantee the stable
supply of this fuel and in long-term
will safeguard the interests of both
producers and suppliers.

• The decline in LNG FIDs can be

partly attributed to the LNG buyers’
shift from traditional long-term Source: GECF Workshop, May
2018 (IGU data)
contracts.
 Global Energy Demand: to rise by 29%
between 2017 and 2040
Global energy demand by fuel type (Mtoe) Global energy mix in 2016 and 2040
18000
2016 2040
16000
12%
14000 17%
2% 22%
12000 26%
5% 2%
10000
6%
8000
13.8 Gtoe 17.8 Gtoe
6000
27%
4000 20%
32% 29%
2000

0
2000 2004 2008 2012 2016 2020 2024 2028 2032 2036 2040

Natural Gas Oil Coal Nuclear Hydro Renewables

 Gl obal energy demand is projec ted to grow by 1.1% per annum, amid Source: GECF Global Gas
Outlook 2040 (2017 edition)
population and economic growth, as well as expanding middle class i n
developing countries.
 The share of gas in the overall energy mi x will inc reas e s trongl y by
2040. Natural gas will occ upy s econd place in the global energy mi x,
overtaking coal. 9
 Global Natural Gas Demand: increases
to 5395 bcm in 2040
Natural gas demand by region (bcm) Natural gas demand by sector (bcm)
6000 6000

5000 5000

4000 4000

3000 3000

2000 2000

1000 1000

0 0
2000 2005 2010 2016 2020 2025 2030 2035 2040 2000 2010 2016 2020 2030 2040

Non-OECD Asia North America Middle East Domestic Sectors Industry Feedstocks
CIS OECD Europe South America Transport Power Generation Heat Generation
OECD Asia-Pacific Africa Non-OECD Europe
Hydrogen Generation Refinery Other Uses
Source: GECF Global Gas
Outlook 2040 (2017 edition)
 Devel oping and emerging ec onomies , i ncluding non-OECD Asia (3.5%), Afri ca
(2.5%), and the Middle East (2.2%), will lead gas demand growth by 2040.
 Power generation will remai n the larges t natural gas c ons umi ng s ec tor. It will
consume 2329 bcm, or 43% of global gas demand in 2040.
10
 The Glut in LNG market: From forecast
to reality 60
LNG Short Term Forecasting 2017-2020 (Mt)

50
• Around 110 million tons (Mt) of LNG 5,50
capacity is expected to come on- 40
stream between 2017 and 2020.
30 2,40
• The glut in global LNG supply was not 5,50
20 5,50 6,75 44,30
observed in 2017 as LNG market was
balanced both in higher quantity of 9,00
10 16,95
traded volumes and competitive 9,65 1,50
0 3,80
prices.
2017 2018 2019 2020
• If the pretended oversuppl y by some
Australia U.S. Russia Cameroon Indonesia Malaysia
forecasters combined with lower
LNG price (US$/MmBtu) 2016 2017 % change
prices, has to happen and persist for
Average North East Asia spot LNG price 5.8 7.23 25%
a long period, the market will react
through postponement of projects’ Average South West Europe spot LNG price 5.0 6.50 30%

FIDs, lower plant utilizations or even Long Term Japan LNG 6.77 8.098 20%

shut-down of liquefaction plants. Source: ICIS & Argus

• From the investment perspective, any

project that can come on-stream after
2024, would meet favourable
economic conditions to be feasible.
 The role of Natural Gas in a sustainable
energy future
18000
16000
14000
12000
10000
Mtoe

8000
75%
6000 80% 72% 70%
4000
2000 26% 28% 29%
22%
0
2016 2040 Base Case Scenario 2040 Carbon Mitigation Scenario 2040 Technology Advancement
Scenario
Natural Gas Primary Consumption Oil Primary Consumption Coal Primary Consumption Non-Fossil Fuel Consumption
Source: GECF Global Gas
Outlook 2040 (2017 edition)
Challenges facing the Natural Gas
industry
Concerns surrounding security of gas demand, stemming from unclear policies
 Unclear support to natural gas in the transition to low carbon economies (e.g. NDCs do not refer explicitly to natural gas;
uncertainties regarding the role of gas vs. coal in some key markets)
 Policy hesitation on nuclear decommissioning, despite ageing fleets and increasing safety costs ( the Fukushima effect
appears to be weakening in some regions)
 Natural gas suffers from the erroneous perception that there is a lack of supply security (natural gas improves security of
supply because of its abundance, affordability and diversification of supply sources with growing LNG)
Lack of visibility in gas revenues
 Emergence of new gas transaction approaches with increasing pressure on long-term contracts and oil based indexation
 New gas pricing approaches expose gas project developers to large market fluctuations
Funding issues
 Difficulties to secure funding for capital-intensive projects due to high risks (e.g. visibility on gas revenues, increasing
complexity of projects in some areas)
 Financial institutions are moving away from funding oil and gas projects (e.g. the World Bank)
Geopolitics and sanctions
 Geopolitical tensions in key supply regions (e.g. the Middle East)
 Increasing sanctions restrain sponsors from accessing markets and investing in valuable gas opportunities
Natural Gas can be a solution towards
sustainable development (SD)
Sustainable development means achieving a balance between environment, social
and economic dimensions… Natural gas can be a solution
Economic advantages of gas
• Abundance of natural gas
Economy • Energy efficiency of gas
technologies
• Less carbon penalties
Sustainable • Flexibility
Environmental Development
advantages of gas
Environment Society Social advantages of gas
• Lower CO2 emissions (more
• Support Improved accessibility and
than half compared to coal)
affordability of energy
• Less air pollution (SOX, NOX..)
• Support energy comfort
• Particles (very negligible
• Support the development of local
emissions)
activities
 MUCHAS
GRACIAS
28 AUGUST 2018
E M A I L : R O B E R T O . A R E N A S @ G E C F. O R G
W E B : W W W. G E C F. O R G
TEL: +974 4404 8417
T O R N A D O T O W E R , W E S T B AY, D O H A , Q ATA R , P. O . B O X 2 3 7 5 3