Natural Gas To Play Larger Role in Many Markets

Natural gas trade will play a stronger role in all OECD regional markets in the short- to medium term, according to the International Energy Agency.

In its just-released Natural Gas Market Outlook 2008, the IEA says imports will constitute more than half of total supplies, with LNG expected to reach nearly 20%. In OECD North America, indigenous production will continue to supply more than 90% of expected demand by 2015, yet LNG imports are expected to be more than double 2007 levels.

Other key findings of the report:

• Gas demand for power is growing, particularly in the IEA but also in a number of major producing and consuming non-OECD countries. Gasfired power has dominated supply growth in IEA countries since 2000; this looks set to continue, notwithstanding strong growth in renewables.
• Investment uncertainties, cost increases and delays remain a major issue in most gas markets and are continuing to constitute a threatto long-term security of supply. The escalation of engineering, procurement and construction [EPC] costs, the tight engineering market and risks in producing
  countries were amongst the main causes for investment project delays.
• Gas markets are on their way to globalisation. Flexible LNG (spot and short-term) played a greater role in inter-regional market balancing in 2007. In the present tight market context, this market integration seems to be aligning prices in some regions at higher levels.
• More transparency on prices and flows and more competitive internal markets could bring beneficial effects from interregional competition in the long term, as well as improving gas security.
• Domestic markets of many major producing countries are now consuming more gas than before and new energy policies underline the priority of local demand. In the medium- to long term, progressively rising domestic prices in these markets might provide economic incentives to develop resources and use gas more efficiently. In the absence of price reform, these developments will not occur.

Comments

[NOWHEREMAN:]

Before you continue about Gas Markets, suggest you take a look at LNG, built an LNG terminal when it was the FAD, like Ethanol and now Solar.

Went from under $3 to $45 and now is back under $3, losing money like water through a sieve.

Apparently, the IEA know diddly about what makes Markets move. No one will ship Nat Gas here when they can get around double elsewhere.

2008 Sep 23 01:43 PM

[Urbane Gori...:]

paultaut... A valid point... Look at Cheniere.. And I just read an article about a new LNG transfer station in the making on the Columbia Gorge in Oregon. The original idea was to ship LNG in to Oregon... Now they've decided, they'll use it to ship LNG from Canada out to the rest of the world. Couple that with Saudi Arabia to redirect their LNG away from the US and to 'anyone who can pay the highest price'. and it's pretty clear that we will not see LNG unless we are willing to pay through the nose. I really like the looks of CHK, XTO and the gas drillers here in the US over any program that relies on the rest of the world to supply us. (Gazprom comes to mind. Doesn't that give you the willies?... Woah!) .. Oh yeah... Heard an interview with the CEO of CHK... He's looking to ship gas out as well, because as he put it, 'We can sell it for a considerably higher price outside the US.'

jegan ;-)

2008 Sep 23 03:17 PM

[Ferdinand E...:]

Good comments. The big boss of the IEA sent me a mail complaining about my calling his oil production forecasts absurd. According to him, the IEA only forecasts consumption. The CEO of Total once said that he would be surprised if oil production exceeded 100mb/d, but according to MR CEO the IEA forecasts an oil consumption in 2030 of 121 mb/d. That's what they call brilliance.

As for shipping gas from Canada to e.g. Asia, wouldn't anybody who has any intelligence at all do that. With all due respect, Ms Palin knows what she is talking about where the gas pipeline from Alaska toward the US is concerned.

2008 Sep 23 03:34 PM