1. 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

2. Croatia: a Beautiful Part of the Globe
4-6 May 2005, Opatija,Croatia

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

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

5. 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
4-6 May 2005, Opatija,Croatia

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

7. 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
4-6 May 2005, Opatija,Croatia

8. 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
4-6 May 2005, Opatija,Croatia

9. 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 – 2020)
4-6 May 2005, Opatija,Croatia

10. Costs in the LNG chain Average price per ship ($ million) 8 5 6 7 9 1011
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)
4-6 May 2005, Opatija,Croatia

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

12. Natural Gas Spot Prices USA
Fluctuerende
Bron AGA
4-6 May 2005, Opatija,Croatia

13. LNG trade history and perspectives15
Bcm
LNG trade as %
of total gas market 11 8 6
History (CEDIGAZ)
Forecast (IEA weo 2004)
4-6 May 2005, Opatija,Croatia

14. International LNG trade: connecting markets
4-6 May 2005, Opatija,Croatia

15. 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.
4-6 May 2005, Opatija,Croatia

16. 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)
4-6 May 2005, Opatija,Croatia

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

18. Costs of Transport for Different Routes
4-6 May 2005, Opatija,Croatia

19. 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
4-6 May 2005, Opatija,Croatia

20. 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
4-6 May 2005, Opatija,Croatia

21. 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.
4-6 May 2005, Opatija,Croatia

22. 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!
4-6 May 2005, Opatija,Croatia

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