Global LNG developments and their impact on Europe FEEM Gas Talks. Anne-Sophie Corbeau, Research Fellow November 21, 2014

Transcription

1 Global LNG developments and their impact on Europe FEEM Gas Talks Anne-Sophie Corbeau, Research Fellow November 21, 214

2 Europe and LNG imports 6 5 Europe s supply and demand balance versus LNG imports This implies a higher reliance on Russian gas 12 1 LNG (right) Bcm bcm 235 bcm 8 6 Production Demand Source: IEA annual data (Europe = OECD Europe). Europe s net imports have been steadily increasing up to 21, then dropped by one tenth over LNG represents now only 2% of total net imports (against one third over 21-11) Europe has significant LNG import capacity spread over the Continent (around 2 bcm) But it is underutilized (around 25%) New capacity is sill added, notably in countries with low supply diversity (Lithuania, Poland) Europe is also close to some LNG producers 2

3 Bcm Why does Europe not get more LNG? Asian gas imports needs are rising Demand Production Net imports Demand Production Net imports China Japan/Korea Other Asian importers Bcm Global LNG supply insufficient for Asia (21-13) Net imports increase (Asia) Demand LNG Supply Pipeline (Central Asia) Note: Other Asian countries include only importing countries. USD/Mbtu Asian gas prices are the highest HH NBP German BP Japan LNG 3

4 Looking forward: LNG supply potential for Europe Short term Global LNG market is relatively balanced But little additional LNG supply arriving over the coming months (besides QCLNG) Asian LNG demand is key this winter (75% of global LNG supply) Key uncertainty on weather: China, Japan and Korea represent 1 bcm of res/com + CHP demand Long term Existing LNG regas capacity allows Europe to import larger LNG quantities (1 bcm+) Better interconnections would allow LNG to penetrate Eastern European markets But many uncertainties on future gas supply/demand balance Europe is not alone on global LNG markets (prices and companies strategies will matter) 4

5 Europe import needs, the first major unknown Bcm Europe s production and import needs NPS 45 NPS 45 NPS This is more than today s Russian exports to Europe Production Imports In a green scenario, European gas demand is one third lower than in the baseline scenario And import needs lower than in 212 In the current context, a low gas demand scenario could also emerge from the will to reduce gas import dependency 5

6 LNG to the rescue? The medium-term picture LNG liquefaction capacity under construction United States Russia Africa Bcm Source: Kapsarc s analysis Norway Latin America Middle East Asia Australia A new wave of LNG supply has already started with Papua New Guinea (May 214) 8 bcm of Australian projects are under construction, arriving as soon as end of 214 Two US LNG projects are also under construction (Sabine Pass, Cameron), while two other projects have won FERC s approval No new project expected to arrive from East Africa or Canada over that timeframe This new LNG will partially come to Europe, but one should not expect very large quantities as Asia will continue to absorb new LNG supplies 6

7 Where will this new LNG go? Contracted LNG* Uncommitted 7% Aggregators (Others) 13% Asian companies 6% 33% Aggregators (US) 2% Source: Kapsarc s analysis *Based on capacity with FID + US projects approved by DOE (non FTA). Asian countries dominate in terms of LNG supplies contracted, but some may just have taken an option Significant quantities of US LNG are contracted by aggregators, which are likely to optimize their portfolio rather than follow a nationalistic approach Some uncontracted LNG is still available 7

8 Looking beyond 22: who will bring new LNG supply? LNG liquefaction projects planned Mtpa ~65 ~27 ~29 ~5 ~55 ~65 ~45 Source: KAPSARC, EIA, IEA, NEB Note: East Africa includes potential projects up to 5 mtpa in Mozambique. 8

9 Comparing LNG projects North America The US is very advanced with at least 4 projects likely to move ahead. It will be the 3rd largest LNG producer by 22. Canada faces mutliple hurdles fiscal uncertainty, First Nations opposition, high costs, remoteness, GHG emissions target Russia Yamal LNG under construction a few other projects planned: Sakhalin 2 expansion the easiest choice. Projects often driven by politics but access to finance and technology will impact future LNG projects; pipeline projects the only way out? East Africa Lots of gas, close to South Asia Important investments from Asian companies but regulatory uncertainties, local content regulations, domestic market obligations, remoteness of the resources are hurdles to overcome Australia Will be the largest LNG exporter by 22. Recent projects faced costs overruns and delays (LNG projects expensive compared to peers). A few projects already cancelled. Debate on domestic market and prices 9

10 Thank you for your attention 1