Recent trends in world natural gas demand: The year 2017 still highlights the strong competition between natural gas, coal and renewable energies. While the global economic recovery has strengthened, it is estimated that growth in global gas consumption accelerated to 3% in the first three quarters of 2017, compared to the same period last year.
Many factors contributed to the strong expansion of global gas demand in 2017. As in 2016, Europe and China were the fastest growing gas markets. For the third year in a row, European gas consumption recorded strong growth in 2017, provisionally estimated at 5%, after a steady decline over the period 2010-2014. Many factors were at play: coal-to-gas switching in power generation as gas competitiveness versus coal improved; the replacement of some coal-fired power plants: a steady trend in the heating sector; the gradual economic recovery; a reduction in hydropower; French nuclear problems and a greater use of gas in transport. At the international level, it is China that has seen the largest increase, in absolute terms, in its gas demand. Cedigaz preliminary estimates show a record growth of 18% (+ 35 Bcm) in 2017, double the average growth rate observed over the period 2010-2016.
Growing production and supply capacities: On the supply side, natural gas production recorded a strong growth in 2017. World gas production increased by 4% in the first three quarters of 2017, according to Cedigaz provisional estimates. We note a positive trend in the United States, as shale gas production accelerated (Pennsylvania). In 2017, the United States moved from being a net importer to a net exporter. In Russia, natural gas production rose sharply in 2017, at an estimated rate of 8%, to support strong growth in exports and domestic demand. Since 2014, Russia has significantly increased its exports to Europe and its market share in European supply has steadily increased. Numerous projects (including Yamal LNG), will significantly increase Russia’s production and export capacities in the future. In Iran, production growth is driven by the ramp up of South Pars phases and this development is primarily dedicated to the domestic market. There was also a substantial growth in Norway’s gas production in 2017 (+ 7%), as the government has raised the production cap at the Troll field, which led to growing exports to the United Kingdom. In Egypt, production began to grow after seven years of decline thanks to the commissioning of the West Nile Delta Project. Egypt plans to become self-sufficient in the short term thanks to the ramping up of major projects, including the Zohr field, which began production in December.
One of the other highlights of the year 2017 is the announcement of Qatar to lift the moratorium on the development of the giant North Field to increase national gas production by 30% by 2024. These recent supply-side developments will be critical to securing and diversifying supplies while limiting market tensions. However, we must not exclude geopolitical risks, which could be a wildcard.
The LNG industry as a key engine of natural gas expansion: The year 2016 has really marked the beginning of a new massive wave of expansion of the LNG supply (+ 7%). This latter has increased in intensity in 2017, with an additional gain estimated at 30 Mt (+ 11%), the largest increase ever recorded since 2010. Around half of this growth is attributable to Australia and more than a third to the United States. China alone has absorbed around 40% of the additional LNG supply to meet the strong growth in domestic demand. LNG was favored over pipelines imports which were less competitive throughout most of the year.
As in 2016 and contrary to what was predicted by many analysts, there was no significant surplus of LNG on the international market in 2017, which would seek taker in North-West Europe, where there is excess import capacity. On the other hand, Southern European countries have significantly increased their purchases of LNG. To read the full article, click here. For more information visit www.cedigaz.org
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