The World of Gas, a Global Gas Market? George H. B. Verberg President International Gas Union 20th International Scientific Meeting of Gas Experts 4- May 2005, Opatija,Croatia

Croatia: a Beautiful Part of the Globe 20-9-2018 4-6 May 2005, Opatija,Croatia

Croatia’s Gas Market: Congratulations with this 20th Scientific Gas Conference ! 20-9-2018 4-6 May 2005, Opatija,Croatia

Not That Long Ago…..:The Gas Industry Started To Serve The Customer! 20-9-2018 4-6 May 2005, Opatija,Croatia

World consumption of primairy energy per fuel type, 1970-2025 De groei van duurzame energiebronnen is hoog maar het zal nog enkele decaden duren voordat een aanzienlijk aandeel in de wereld energievoorzieing kan worden verworven. In de OECD landen zal de bijdrage wel eerder wat groter worden maar ook hier zal het nog lang duren voordat fossiele brandstoffen minder dan de helft zullen bijdragen aan de energiemix. Source: EIA data 20-9-2018 4-6 May 2005, Opatija,Croatia

Energy Consumption in Perspective 1/3 of world population IEA data year 2002 20-9-2018 4-6 May 2005, Opatija,Croatia

CO2 emission from Power plants spread due to type of coal (lignite/hard coal) and technology (old/new-high-efficiency) CCGT as Back UP Sources: life-cycle assessment of electricity generation systems and applications for climate change policy analysis, Meier, 2002, published on website Nuclear Energy Institute; own data; IEA 20-9-2018 4-6 May 2005, Opatija,Croatia

Gas share in primary energy demand current gas share in Europe: 22% forecasted gas share China 2020: 10-12% (others) 6%(IEA); Source: IEA/BP 20-9-2018 4-6 May 2005, Opatija,Croatia

Since than demand has been growing: incremental demand of natural gas till 2010 and 2020…. largest liquefaction train: 7.8 mtpa (Qatar) 148 60 (2002 - 2010) (2002 – 2020) 20-9-2018 4-6 May 2005, Opatija,Croatia

Costs in the LNG chain Average price per ship ($ million) 8 5 6 7 9 10 11 1989 1991 1993 1995 1997 1999 2001 2.5% p.a. Upstream costs ($/boe) Liquifaction costst transformed ($ per ton of capacity) From a presentation by BP (february 2003) 20-9-2018 4-6 May 2005, Opatija,Croatia

Middle East LNG—Setting a New Global Cost Benchmark ($ per MMBtu) Source: Cambridge Energy Research Associates. 31001-10 20-9-2018 4-6 May 2005, Opatija,Croatia

Natural Gas Spot Prices USA Fluctuerende Bron AGA 20-9-2018 4-6 May 2005, Opatija,Croatia

LNG trade history and perspectives 15 Bcm LNG trade as % of total gas market 11 8 6 History (CEDIGAZ) Forecast (IEA weo 2004) 20-9-2018 4-6 May 2005, Opatija,Croatia

International LNG trade: connecting markets 20-9-2018 4-6 May 2005, Opatija,Croatia

Europe’s security of supply and LNG Not only Europe likes to diversify its supplies; The only cost-effective way to cope with the security of supply issue, Also the suppliers like to diversify their sales portfolios; LNG will increasingly connect the present separated gas markets in the world; Long term contracts will remain Europe’s backbone for pipeline gas and LNG; Some 9% of LNG sales are at present spot-sales, and it is expected to grow to some 20% in the coming years. 20-9-2018 4-6 May 2005, Opatija,Croatia

Europe’s security of supply and LNG (2) Growing LNG trade will enable price arbitration, so prices in the demand regions become more and more inter-linked, it will take time: >5 years The growing LNG spot market enhances flexibility and competition, at the same time it is an essential tool for the big gas suppliers to push gas prices in the desired direction (a reliable supplier cannot close the valve for a LT-gas contract, but he can do for spot supplies) 20-9-2018 4-6 May 2005, Opatija,Croatia

How to diversify further in Europe ?! 2000 km 3000 km 4000 km Yamal Central Iran sif 20-9-2018 4-6 May 2005, Opatija,Croatia

Costs of Transport for Different Routes 20-9-2018 4-6 May 2005, Opatija,Croatia

Proven world gas reserves (trillion cm) 56.7 71.6 6.6 7.5 Europe Russia North America 16.3 Middle East 13.8 Asia Pacific Region 7.3 Africa South and Central America Data: IEA WEO 2004 / Cedigaz 20-9-2018 4-6 May 2005, Opatija,Croatia

So for Many Decades to Come... Enough natural gas, but Regions of demand are NOT the regions with reserves, so A lot of long distance transportation and transit, Through many countries or narrow sea straits And production areas are more and more difficult and costly 20-9-2018 4-6 May 2005, Opatija,Croatia

BUT will investments upstream come in time? More and more Oil CIEs do have difficulties in getting access to gas reserves under acceptable and stable conditions ; Top people like Thiery Desmarest(TOTAL),Lee Raymond(ExxonMobil) and Lord Brown(BP) pointed to this recently; Mandil’s question (Oct.2004): wouldn’t it be better if Oil CIEs would invest more instead of executing shares buy back schemes could well be a symptom of these difficulties. 20-9-2018 4-6 May 2005, Opatija,Croatia

May 3 2005: IEA warns for shortfall of investments in energy Global investment remained below the IEA’s 2003 estimate of the $16.000bn needed by 2030 to meet demand; Lehman Brothers / Citybank predict investments in exploration will rise by less than 6% in 2005 against 12% in 2004: So there are problems to be solved an challenges to be met! 20-9-2018 4-6 May 2005, Opatija,Croatia

23rd World Gas Conference and Exhibition Thank you See you in Amsterdam! 23rd World Gas Conference and Exhibition June 5 – 9 2006