Medium-Term Gas Market Report 2013 - IEA

EXECUTIVE SUMMARY
EXECUTIVE SUMMARY
2012: moderate supply and demand growth, but drop in global interregional trade
Natural gas had a mixed year in 2012. While growth in demand (2.0%) was lower than the past decade’s
average (2.8% per year), considering the slower growth of the world’s economy, it was relatively
high. The share of natural gas in the global energy mix continued to expand: demand grew at a
higher pace than oil (1.0%), although slower than global renewable electricity generation (9.7%). This
demand picture reflects increasingly diverging trends among non-Organisation for Economic Co-operation
and Development (OECD) regions and OECD regions alike. Growth in demand among non-OECD
regions continued to outpace that of other regions, primarily because of China, where gas consumption
grew by 13% in 2012. Even though this rate represents a slowdown compared with previous years,
China is now only a few billion cubic metres away from catching up with the world’s third-largest gas
user, Iran. China’s contribution alone represented 40% of additional consumption among non-OECD
regions. In contrast, the Former Soviet Union (FSU)/non-OECD Europe was the only non-OECD region
where gas consumption receded. Demand patterns also differ widely among OECD regions: OECD gas
demand gained a modest 1.6% in 2012, lower again this year than the world’s average growth. While
demand growth in OECD Americas and OECD Asia Oceania was well above the global average,
demand in OECD Europe fell by 1.6%. Considering the mild weather felt throughout Europe in 2011
which returned to normal in 2012, this additional loss, entirely driven by the industrial and power
generation sectors, is even more indicative of structural weakness in the power and industry sectors
than the 8.2% loss in 2011.
The supply picture in 2012 underlined significant contrasts among regions, as the United States
contributed single-handedly to almost half of the incremental gas supply. The second-largest
increase came from Norway, followed by Turkmenistan, Saudi Arabia, Qatar, and China. Growth in
Saudi Arabia, Qatar and China corresponded to new field developments, whereas production in
Norway was partially driven by demand in Europe, its main export market, and similarly in
Turkmenistan, where production was partially driven by China. In contrast, Russian gas production
fell substantially, driven by a combination of lower domestic demand and a reduced call for
expensive Russian gas from importing countries. The production picture also reflected the struggle of
many countries to increase their gas production, mostly due to upstream issues, delays in field
development or regulated domestic gas prices being too low to trigger the development of new
fields. This was notably the case in Africa (Algeria, Egypt), the Middle East (Bahrain), Latin America
(Argentina) and Asia (Indonesia, India).
© OECD/IEA, 2013
A surprising outcome in 2012 was lower interregional trade, driven notably by a 2% drop in the
global liquefied natural gas (LNG) trade, while pipeline imports to Europe and the Middle East
receded as well. The decline in LNG trade was caused by an unexpected fall in supply. While global
LNG capacity increased with a new LNG plant in Australia, this new plant was insufficient to
compensate for declining global capacity utilisation: a combination of declining mature fields,
difficulties in developing new production and rapidly increasing domestic demand, constrained by
exports from Asia’s historical suppliers (notably Indonesia), as well as Algeria, Egypt, Oman and the
United Arab Emirates. Additionally, pipeline bombings in Yemen significantly impacted global LNG
exports. Many of these trends will continue to be a major feature of global LNG markets over the
medium term.
MEDIUM-TERM GAS MARKET REPORT 2013 3