20090531-IEA-Natural_Gas_Market_Review_2009_194页_4mb

Natural Gas Market Review 2009 Summary

Core Content

The 2009 Natural Gas Market Review highlights the significant impact of the global economic crisis on the natural gas sector, noting a dramatic reversal in demand and prices from 2008 to 2009. It also addresses supply-side developments, investment challenges, and the importance of gas security, particularly in Europe following the Russia-Ukraine crisis.

Main Views and Key Information

Global Market Dynamics

• Demand and Prices:

  • In the first half of 2008, natural gas demand grew strongly in most IEA regions, reaching up to 10% in some countries.
  • By late 2008 and into 2009, demand sharply declined due to the global recession, with gas prices plummeting from over USD 13 per MBtu in 2008 to around USD 3.50 per MBtu in April 2009.
  • The power sector was particularly affected, as gas-fired power became less competitive due to lower prices and higher coal prices.

• Supply and Production:

  • Unconventional gas production in the United States rose rapidly, with an 8% increase in 2008 and 4% in early 2009.
  • The U.S. is now a significant player in global gas markets, with LNG imports declining in 2008 and increasing to meet Pacific market demand.
  • Norway's gas production increased by 10% in 2008, reaching nearly 100 bcm, and is projected to grow beyond 120 bcm in the coming years, making it the largest IEA gas exporter.

Investment and Market Challenges

• Investment Trends:

  • Falling gas prices and volumes have severely impacted producers' cash flows, leading to reduced investment in the gas value chain.
  • The financial crisis and regulatory uncertainties have further complicated investment decisions, especially for capital-intensive projects.
  • Despite a major expansion of LNG capacity globally, investment in new projects remains low, with only a few approvals in recent years.

• LNG Market Outlook:

  • LNG capacity is expected to grow to at least 370 bcm by 2012, marking a significant increase.
  • The imbalance between liquefaction and regasification capacity is expected to persist, with more regasification capacity already in operation or under construction.

Gas Security and Regional Developments

• Europe's Gas Crisis:

  • Europe faced its largest gas security crisis in early 2009, with nearly 7 bcm of gas not delivered due to the Russia-Ukraine conflict.
  • The crisis exposed the lack of physical interconnection capacity and market mechanisms to redirect gas supply quickly.
  • The review anticipates that IEA ministers will consider principles and an action plan to enhance gas security.

• Regional Highlights:

  • OECD Countries: Gas demand in OECD Europe and North America declined significantly, with OECD Europe experiencing a -13% drop and OECD North America a -3% drop.
  • Non-OECD Countries: China and India are emerging as major gas users, though coal remains dominant in their energy mix.
  • Middle East and North Africa: Countries like Iran are consuming more gas domestically, with limited export potential before 2015.
  • Southeast Asia and West Africa: Gas demand is growing, though at a slower pace compared to other regions.

Market Transparency and Flexibility

• Market Functioning:

  • The review emphasizes the importance of functioning gas markets, especially for efficient supply and demand responses.
  • Greater transparency in data sharing is seen as a key step to improve market functioning and manage energy emergencies.

• Future Outlook:

  • The power sector is expected to drive medium-term demand growth, supported by the flexibility and lower carbon emissions of gas-fired power plants.
  • The role of gas in balancing renewable energy sources, such as wind, is anticipated to increase.
  • The review calls for more investment in diverse gas supply routes and enhanced storage capacity to improve long-term energy security.

Conclusion

The 2009 Natural Gas Market Review underscores the challenges faced by the gas sector due to the global recession, including weak demand, low prices, and investment hesitancy. It highlights the importance of market transparency, gas security, and the need for long-term investment in supply infrastructure to ensure the resilience of the global gas market.