Presentation on theme: "Vladimír Dlouhý, International Advisor, Goldman Sachs"— Presentation transcript:
1 Vladimír Dlouhý, International Advisor, Goldman Sachs Long-term Trends in Natural Gas Supply and DemandVladimír Dlouhý, International Advisor, Goldman Sachspresentation forEGS24 Summit, Prague, May 24, 2012
2 A View on the Path to 80% Carbon Reduction in 2050 (1/4) The Road to Sustainable Energy Has to be Based on a Large Role for Natural GasToday to 2030Gas’s high efficiency and low emissions of CO2 in heating and power generation can make a direct and immediate contribution to the reduction of GHG emission in the EUAdditionally, its flexibility can be well combined with the development of renewable sourcesThe share of natural gas in primary energy consumption is predicted to increase from 26% in 2010 to 30% in 2030 as the EU moves towards a low-carbon economyThe market share of gas in the residential and services sector is expected to decrease, but in the transport and power generation sectors, to increaseSource: Eurogas (Eurogas Roadmap 2050)
3 A View on the Path to 80% Carbon Reduction in 2050 (2/4) The Road to Sustainable Energy Has to be Based on a Large Role for Natural GasNatural Gas Market DevelopmentSource: Eurogas (Eurogas Roadmap 2050)1 Including district heating, raw material and energy branch.
4 A View on the Path to 80% Carbon Reduction in 2050 (3/4) The Road to Sustainable Energy Has to be Based on a Large Role for Natural Gas2030 to 2050After 2030, the need for the development of natural gas power plants and industrial plants equipped with carbon capture and storage (CCS) technology will become apparentThe need for flexible gas-fired plants to support the necessary large- scale development of variable zero-carbon renewables will remainHence, the gas volumes in the power generation and industry sectors will be sustained. Moreover, the natural gas market share in the transport sector is expected to increase even furtherIn the residential and services sector, gas usage could decline further due to increased efficiency and behavioral changesSource: Eurogas (Eurogas Roadmap 2050)
5 A View on the Path to 80% Carbon Reduction in 2050 (4/4) The Road to Sustainable Energy Has to be Based on a Large Role for Natural GasGHG Emission Reduction of 82% (1990 – 2050)1Source: Eurogas (Eurogas Roadmap 2050)1 The study addressed energy related CO2 emissions by sector. Industrial processes and agriculture have not been considered.
6 Energy Demand Market Dynamics (1/4) Demand is Expected to RiseEnergy DemandFactors determining future energy demand in Europe includeContinued economic growth of 2% p.a. after the economic crisis has been overcomeNear stable populationIncreased environmental awareness among politicians and consumersGrowing trend to save energy and to improve energy efficiencyDeliberations at the national level to use nuclear energy and expand the use of renewablesEnergy consumption is expected to only increase by a minimal rate of 0.1% p.a.Source: Eurogas (Long term outlook for Gas Demand and Supply 2007 – 2030)
7 Improvements in Energy Efficiency Market Dynamics (2/4)Demand is Expected to RiseImprovements in Energy EfficiencySource: Eurogas (Long term outlook for Gas Demand and Supply 2007 – 2030)– 2030.
8 Growing Market Share for Natural Gas Market Dynamics (3/4)Demand is Expected to RiseGrowing Market Share for Natural GasNatural gas consumption in EU member states is expected to rise from 437 mtoe in 2007 to a range between 500 to 535 mtoe in , corresponding to an increase of between 14% and 23%At the same time, the share of natural gas in European primary energy demand could rise from 24% in 2007 to 27%-30% in (18% in 1990), with most of the growth expected from power generationDue to its “green properties” and the existing highly efficient application technologies, natural gas will remain the fuel of choice and will continue to make a growing contribution to energy supply in the EU and Europe as a wholeSource: Eurogas (Long term outlook for Gas Demand and Supply 2007 – 2030)
9 Rising Share of Natural Gas in Primary Energy Consumption Market Dynamics (4/4)Demand is Expected to RiseRising Share of Natural Gas in Primary Energy ConsumptionSource: Eurogas (Long term outlook for Gas Demand and Supply 2007 – 2030)
10 Demand Developments Sector Trends Residential and Commericial Sector Natural gas has a 35% market share and is the leader in this sectorFurther market penetration in this sector will slow down considerablyAlready reached high market penetration in major gas consuming countries and upcoming saturation in the sector in othersLow population density which limits greater market penetrationImproving energy efficiency of buildings and moderately growing European populationGas currently accounts for 31% of industrial final energy consumption (excluding industrial power stations)The price of energy plays an important role in the sector and gas will only be able to gain market share at the expense of oil and coal, if it can be supplied at competitive pricesDepending on the economic developments and gas price competitiveness, gas sales to the industrial sector could increase slightly to mtoe in 2030Industrial SectorPower GenerationThe role of natural gas in the power generation segment has increased considerably since 1990 and now gas-fired power stations produce 20% of the electricity in the EU (7.5% in 1990)The exact development of the demand for gas in this segment cannot be ascertainedHowever, given the resource’s considerable potential for reducing CO2 emissions in power generation at low cost, it is expected that power generation would increase its share from 30% (in 2007) to 36-38% of total gas demand by 2030
11 Natural Gas Demand Outlook by Sector Residential & CommercialIndustryPower GenerationOthers (Heat Plants & Others)NGV
12 Supply and Dependency on Imports (1/4) Key DevelopmentsIndigenous gas production in Europe is going to further declineGiven the increasing gas demand and the gradually declining indigenous production, the currently contracted gas supply cannot meet gas demand in the longer term, so new imports will be necessary from 2015 onwardsEuropean gas production (including Norway) in 2010 accounted for 55% of supplies to the European gas market; by 2030, the EU gas market will need around 70% from regions outside EuropeNatural gas reserves are abundant worldwide, however, with the global proved reserves accounting for 185 trillion m3Although Russia will remain the key gas supplier for Europe, African countries and the Middle East will provide Europe with increasing quantities of gas as wellSource: Eurogas (Long term outlook for Gas Demand and Supply ), British Petroleum 2010)
13 Supply and Dependency on Imports (2/4) EU27 Supply OutlookSource: Eurogas (Long term outlook for Gas Demand and Supply ), British Petroleum 2010)
14 Supply and Dependency on Imports (3/4) Future Security of SupplyPotential shale gas reserves in Europe could strengthen the continent’s position as wellThere have been increasing exploration efforts in Poland and Romania with largely positive resultsTo ensure the future security of supplyGas production and recovery must be maximized from indigenous sourcesNew technologies for exploration and exploitation must be supportedStable and competitive fiscal and regulatory regimes must be createdInfrastructure must be improved: new supply routes to Europe and LNG terminalsPlanning and permitting processes for major projects must be facilitatedResearch and development into biogas production, distribution and final use should be encouraged
15 Supply and Dependency on Imports (4/4) EU27 Import Dependency from Outside EuropeSource: Eurogas (Long term outlook for Gas Demand and Supply ), British Petroleum 2010)
16 Supply Potential for Europe (1/2) Supply is Set to See Substantial Change Towards Imported GasOverviewSupply PotentialNetherlands and UK production is declining with some increase in Norwegian productionPipeline infrastructure being established (Nord Stream, South Stream, Nabucco) which would add around 150 bcm to existing capacityLNG regasification growing rapidly, supplied in the near term by LNG from Egypt, Trinidad and QatarShale gas with strong growth in the US leading to LNG cargo diversion, and potential in EuropeSource: ENTSOGI, British Petroleum 2010
17 Supply Potential for Europe (2/2) Supply is Set to See Substantial Change Towards Imported GasIndigenous Gas Production (MTOE)Gas Reserves Around Europe (tr m3)Russia44.38Norway2.05Other LNG40.96Azerbaijan1.31Turkme-nistan8.10Algeria4.50Import Dependency from Outside Europe (in % of Demand)Libya1.54Iraq3.17Nigeria5.25Qatar25.37Source: ENTSOGI, British Petroleum 2010
18 Development of Supply Situation Total import capacity in Europe is set to increase from 466bcm in 2010 to 639bcm in 2020 and 715bcm in Whilst this significantly exceeds the demand projections of the EU27, several projects might still get delayed or cancelledOverview of Key Supply Regions\\IBLNS001VF\CEETEAMGB\Czech Republic\Euro Gas Market fo V.Dlouhy Presentation\Two Pages from Net4Gas\Visio\Development of Supply Situation_01.vsd\Section Title
19 Pan-European Gas Pipeline Projects Nord StreamMap of Planned Major Pipeline ProjectsEstablished in 2005 for the construction of two 1,224km natural gas pipelines through the Baltic sea, delivering Russian gas to Germany and West Europe, the project is near its completion with Line 1 completed in Nov 2011 and Line 2 expected to be operational by Q4 2012When operational, the two pipelines will have capacity to transport combined total of 55bcm of gas a yearPipelines are designed to operate for 50 years\\IBLNS002VF\CZECHREPCS\Planned Pipelines_NGS 01.vsdSouth StreamThe South Stream project is another step towards strengthening European energy security and it executes Gazprom’s strategy of diversifying the Russian natural gas supply routesWhen operational the pipeline’s capacity is planned to be 63bcm per yearThe final investment decision on the construction of the planned pipeline will be taken in Nov 2012Nabucco - ???Source: Project websites, Press release
20 Natural Gas in the Czech Republic Demandwill follow the expected European trends abovestrategic decision: gas vs. nuclearSupplyDiversification of supply routesAlmost 100% import dependence50 % supply from FR, rest from Norway (RF:N approx. 3:1) and spot marketImpact of Nord StreamStrategic position vis-a-vis gas deliveries to western EuropeGazelle, more interconnectors in the future, potential link to South StreamFlexibility as to market volatility and emergency situationUnderground natural gas storages40% annual consumption, potential of 60 mil. m3 per day, for 30 days max.Open market, competition