Cedigaz - Page 27

Ten major trends in the European gas market (Part 1)

Posted in CEDIGAZ Insights, Country Report, Energy Transition, Natural Gas Market on

The EU gas and energy sector is in the midst of a profound transformation driven by decarbonisation, digitalisation and decentralisation. The latest report by Cedigaz analyses in ten key points the evolution of the gas sector and includes forward looking views on new trends in EU gas markets.

1. Decarbonisation: The EU has a high decarbonisation objective. With the ratification of the Paris Agreement in 2016 and the 2030 climate and energy framework, the EU energy mix requires a profound transformation. The legislative process to implement the 2030 goals was initiated with the Energy Union Package in 2015 and subsequently by the Energy Security Package and the Clean Energy Package. Already, Europe’s energy system is moving fast from a fossil-fuelled energy system to a low-carbon, more digital and consumer centric system. In this new context, the role of gas in the clean energy transition needs to be defined.

NATURAL GAS DEMAND GROWTH ACCELERATED IN 2017, UNDER THE IMPULSION OF CHINA

Posted in Natural Gas Market, Natural Gas Statistics, Press release on

Recent trends in world natural gas demand

The year 2017 still highlights the strong competition between natural gas, coal and renewable energies. While the global economic recovery has strengthened, it is estimated that growth in global gas consumption accelerated to 3% in the first three quarters of 2017, compared to the same period last year. But, at the same time, global consumption of coal would have increased at a similar pace, driven by Asian countries. In China, coal consumption increased significantly in 2017 after three years of decline. This increase is linked to an acceleration in electricity demand.

Many factors contributed to the strong expansion of global gas demand in 2017. As in 2016, Europe and China were the fastest growing gas markets. For the third year in a row, European gas consumption recorded strong growth in 2017, provisionally estimated at 5%, after a steady decline over the period 2010-2014. Many factors were at play: coal-to-gas switching in power generation as gas competitiveness versus coal improved; the replacement of some coal-fired power plants: a steady trend in the heating sector; the gradual economic recovery; a reduction in hydropower; French nuclear problems and a greater use of gas in transport. At the international level, it is China that has seen the largest increase, in absolute terms, in its gas demand. Cedigaz preliminary estimates show a record growth of 18% (+ 35 Bcm) in 2017, double the average growth rate observed over the period 2010-2016.

LNG Pricing: Is US LNG competitive in North East Asia?

Posted in LNG Markets, LNG Service, Natural Gas Prices on

Out of the 8.3 Mt of US LNG exports recorded in the first 8 months of 2017, 2.37 Mt was exported to the North East Asian countries (29%). This represents a remarkable development given the fact that the US did not send any cargo to North East Asia in 2016.

On average, US LNG has turned out to be the most expensive LNG supply source in the region, priced 18% above the average regional LNG import cost. However, a country by country analysis shows that the US LNG was indeed priced close to the average price of LNG imports for China and even lower for South Korea and Taiwan. Japan is the only country in the region which pays a price for US LNG well above both its average cost of imports ($12.26 vs $8.04, a 52% extra-cost) and regional spot price indexes.