ENTSOG GRIP South - Main Report

2.1 Worldwide context

The growing energy demand in Asia, enhanced by the nuclear accident of the 11 March2011 inFukushima, Japan, thenewcheapshalegas in theUnitedStatesand thedecreaseonconsumption inEuropedue to theeconomical crisis, havechanged theglobal gasmarket creatingbigdifferencesbetweengasprices all over theworld. Asshown inFigure2.1, theestimatedLNGpricesbyJuly2013goes from9.5€/MWh in theUnited States to 38€/MWh in Japan andKorea, reaching almost 43€/MWh incertaincountries of LatinAmericaandbeingnear 26€/MWh in theSouth-west of Europe.

UK 25.41

Korea 38.05

Belgium 25.4

Japan 38.05 Thenewexporters—North AmericaandEastAfrica ;mjj]flMK dYoj]imaj]kYf]phgjl da[]fk]^jgel`]MK China 37

Cove Point 10.45 economicuncertaintymaymean thatmanyof theseproposed hjgb][lkYj]mfdac]dqlgegn]lgÕfYd afn]kle]fl\][akagf >A

India 35.17 DepartmentofEnergy (DOE) inorder toexportLNG. Ingeneral, exportofLNG toanation thathasa free tradeagreement (FTA) with theUS isconsidered in thepublic interestand is typically Yhhjgn]\oal`gmleg\aÕ[Ylagfgj\]dYq&L`]L9koal`)1[gmflja]k$Õn]g^o`a[` currently importLNG (Canada,Mexico, theDominicanRepublic, ChileandSouthKorea),withasixthcountry,Singapore, set to have import capacity in2013.Of thecurrentFTAcountries, only Kgml`Cgj]YYf\hgl]flaYddqKaf_Yhgj]j]hj]k]fl ka_faÕ[YflYf\ economicallyviablemarkets. Asof lateJanuary2013,20companieshavesubmitted applications forUSLNGexport;16of thesehavebeenapproved forFTAcountries, butonlyoneapplication, fromCheniere’s KYZaf]HYkkDaim]^Y[lagfDD;$ `Yk j][]an]\YhhjgnYd ^gj]phgjl tonon-FTAcountries.Theproposedprojectsarepredominately locatedon theGulfCoast, butalso includeproposed facilitieson theEastandWestCoasts. Importantly, nineof theapplications, af[dm\af_;`]fa]j]Ìk$ogmd\ZYk]]phgjlk ^jgeeg\aÕ]\$ ]paklaf_ DF?aehgjl ^Y[adala]k&L`]k]ÉZjgofÕ]d\Ê]phgjlhjgb][lkogmd\ dac]dq]fbgqka_faÕ[Yfl [gklY\nYflY_]k ^jgel`]]paklaf_ af%hdY[] infrastructure (particularlyutilities, storageandport facilities), af[gehYjakgfoal`gl`]j É_j]]fÕ]d\Êhjgb][lk$oal`gml km[` af^jYkljm[lmj]Ydj]Y\q afhdY[]&;YhalYd [gklk ^gjMKZjgofÕ]d\ LNGprojectsarebroadlyestimated tobebetweenUS$550million andUS$650millionpermtpaof capacity, substantially less than lqha[Yd _j]]fÕ]d\hjgb][lk& 2 More than200mtpaofUSLNGexport capacityhasbeen proposed,whichcould translate intomore than28bcf/dofgas exports.However, themarket isunlikely toneedanywherenear thatamount,withglobal LNGdemand in2012at justover This rupture in LNG prices is expe ted to remain as long as the development of new LNG Re- ceiving T rmin l , mainly in Asia, will increase more significantly t an the new supplies expected, mainly from Australia, Africa and theUnited States.

Figure2.Global LNGcapacityanddemand

0 100 200 300 400 500 600 700

2012 Existing Million tonnesperyear Source:EYassessmentsofdata frommultiplesources 2013 2014 2015 2016 2017 2018 Possible 2019 Construction

2020

2021

2022

2023

2024 Demand

2025

Speculative

Figure 2.2: Global LNG capacity and demand inmillion tons per annum (Source: Ernst&Young assessments of data frommultiple sources)

*EY[imYja]=imalqJ]k]Yj[`$ Global LNGOutlook ,10September2012

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ENTSOG–GRIPSouth 2013–2022

Global LNG:willnewdemandandnewsupplymeannewpricing?

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