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La Russie: Gant gazier face

un march en volutionAnne-Sophie Corbeau, Senior gas expert

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Setting the sceneWhat happened in 2011 on global gas markets

World gas demand increased by a modest 2% in 2011

Lower than the 2.8%/y over the past decade

Gas demand increased in all regions but OECD Europe

China was by far the fastest growing market with 21% in 2011

Russia was still on a growing path

Supply increased faster than demand

The increase was supported by the United States, Russia and

Qatar

Russias production reached its historical peak Production dropped in Europe and Africa

But LNG markets were still tight in 2011

Notably due to the surge in Japanese LNG imports

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What about Russia?

The largest holder of proven gas reserves

Russia was the largest producer in 2011, slightly ahead of

the US

Maybe slightly behind in 2012 due to a production decline

The second largest gas consumer behind the United

States

Production largely

dependent on

exports to Europe,

as well as to FSU

No exports to Asia

yet, besides LNG

Note: 2012 estimates.

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No convergence of global gas pricesAsian prices stand at a record

Regional gas prices are determined by their respective regional dynamics

Asian prices follow oil prices moves; but Japan and other countries would like to buy

at NBP or HH linked gas prices

North America is totally disconnected from other regions

European gas prices reflect a dual spot and oil indexation, no longer fully reflect pure

oil indexation

Source: ICE, EIA, IEA, German Customs, Japanese Customs.

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Russias biggest problem: its main market,

Europe, lost 10 years of demand

Although European gas demand recovered from the economic crisis

starting end-2009 (mostly due to lower gas prices), this did not last

Seasonally-adjusted gas demand has been declining since mid-2010,

in response to increasing gas prices and weak economy

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2012: Is there any floor for OECD

European gas demand? Despite a cold snap in February, 2012 does not look better

Demand dropped by an estimated 3% over the first 11 months

The fall can be mostly attributed to power and industry sectors

Power generation by source over January-November, 2012 versus 2011

Note: REN exclude hydro.

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Current gas prices barely make gas

competitive

US sends us

cheap coal

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Any hope for gas-fired plants over the

medium term?Europe power generation by source

Power demand increases slowly due to low GDP growth

Renewables generation (excl. hydro) more than doubles from 2010

There is less room for combustible fuels

Gas has to compete against coal-fired plants

But is disadvantaged due to high gas prices (and no meaningful CO2 price)

Towards a Golden Age of Coal and a Dark Age of Gas?

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By contrast, gas is catching up with coal

in the US power sector

Low gas prices are accelerating the penetration of gas in the power sector

The increase has been even higher in early 2012: generation from gas-fired

plants increased by 25% and coal dropped by 15%

2012 was exceptional with extremely hot summer, nuclear outages

Thanks for sending cheap coal to Europe!

This market is now closed to Russia (and any would-be LNG exporter)

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China - A growing need for imports

Gas demand grows in all sectors, except fertiliser producers

New sectors emerge such as transport

China needs to solve issues such as pricing and regulation

Imports to increase from ~30 bcm in 2011 to 113 bcm by 2017

Russia has been negotiating for a decade to export to China, but still disagrees on

the price

China has many alternatives: Central Asia, LNG, Myanmar, so Russia needs to act

fast to capture the next window of opportunity Biggest uncertainty: Chinese shale gas, myth or reality??

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FSU and North America are set to be the

largest contributors to additional supply

FSU is growing fast, driven by incremental exports, notably to China

North Americas gas production meets booming demand and some

LNG exports

China and Australia become significant gas producers European domestic production continues to decline

Incremental gas production, 2011-17

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Some hope in the medium term:

European imports are set to increase

60 bcm more than in 2011 needed in 2017, but only around 35 bcm more

than in 2010

Gas demand set to recover slightly over time

Even if we stay below 2010s levels by 2017

No additional gas from North Africa, nothing yet from the Caspian region,tough competition for LNG: this is actually playing in Russias advantage

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Russia and the CaspianThe interest is shifting to Asia

Yamal started producing late 2012, could produce up to 115 bcm/y by 2017

Turkmenistan is increasing exports to China

Shah Deniz-II (hopefully) on track to produce in 2018

Question marks on other Russian projects: Far East/East Siberian projects,LNG (Chayanda -> LNG)

2017+2017+

2017+

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Middle Eastern exports are not a threat

to Russia over the medium term

0

100

200

300

400

500

600

bcm

Bahrain Iran Iraq Jordan

Kuwait Oman Qatar Saudi Arabia

Syrian Arab Republic United Arab Emirates Yemen

Most countries are struggling to develop their gas fields due to difficult

fields combined with low domestic gas prices

Qatar is the exception

Iraq is the wild card, but holds huge undeveloped resources and could

easily use flared gas

Net exports will go down over the medium term

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Unconventional gas production in 2011Already 16% of global gas supply

Half of the worlds unconventional gas production comes from tight

gas; shale gas is catching up but remains a North American story

It has already had an impact on gas markets prices (renegotiation of

contracts), future supply/trade (less LNG imports, possibility of US

exports), and global interest in shale gas

North AmericaTight ~ 217 bcm

Shale ~ 225 bcm

CBM ~ 55 bcm

Latin AmericaTight ~ 2 bcm

EuropeCBM < 1 bcm

FSUTight ~ 20 bcm

CBM < 1 bcm

Middle East & Africa

Tight gas > 3 bcm

AsiaTight ~ 35 bcm

CBM ~ 5 bcm

AustraliaCBM ~ 6 bcm

Note: US unconventional gas numbers revised following the release of AEO 2013. China: CMM excluded.

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Want to know more?

The Medium-Term GasMarket Report 2012 can be

purchased online at:

www.iea.org

Thank you for your

attention!

Questions and comments:

Anne-Sophie.Corbeau@iea.org

http://www.iea.org/http://www.iea.org/