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APEC Energy Trade and Investment Roundtable Cairns, Australia 1 October 2008 PowerPoint PPT Presentation


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APEC Energy Trade and Investment Roundtable Cairns, Australia 1 October 2008. Robert Pritchard APEC Gas Forum. Basic Truths: Energy in APEC. Economic activity underpinned by energy Geographic disparity in energy supply and demand

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Apec energy trade and investment roundtable cairns australia 1 october 2008

APEC Energy Trade and

Investment Roundtable

Cairns, Australia

1 October 2008

Robert Pritchard

APEC Gas Forum


Basic truths energy in apec

Basic Truths: Energy in APEC

  • Economic activity underpinned by energy

  • Geographic disparity in energy supply and demand

  • Increasing reliance of APEC economies on cross-border energy trade


Why was apgas established

Why Was APGAS Established?

  • APEC Energy Ministers wished to accelerate cross-border natural gas trade

  • A response to energy security concerns

  • APGAS to create “a competitive, open and transparent marketplace for natural gas, particularly LNG, in the region”

  • APGAS applauds APEC for its ongoing commitment to open trade and investment


Dramatic change in lng supply demand balance

Dramatic Change in LNG Supply/Demand Balance

  • Demand has outstripped supply

  • Asia-Pacific and Atlantic Basin markets have started to converge over last 2 years

  • This has been commercially driven

  • The change is shown by next 2 slides


Apec energy trade and investment roundtable cairns australia 1 october 2008

Asia-Pacific LNG Trade 2005 (bcmpa)

EXPORTS

IMPORTS

Total trade: 122 bcmpa (89 mtpa)


Apec energy trade and investment roundtable cairns australia 1 october 2008

Asia-Pacific LNG Trade 2007 (bcmpa)

EXPORTS

IMPORTS

Total trade: 148 bcmpa (108 mtpa)

new entrant *


Dramatic change in the climate outlook

Dramatic Change in the Climate Outlook

  • With an increasingly carbon-constrained global economy, climate change is now as important as energy security on the APEC policy agenda

  • LNG is the cleanest of all fossil fuels

  • Importance of accelerating cross-border natural gas trade continues to mount as every day passes


Unfccc thinking september 2008

UNFCCC Thinking September 2008

  • Energy sector is responsible for largest share of global emissions

  • Energy infrastructure requires a total investment of $22 trillion to 2030

  • This should be invested in low-emissions technologies

  • Otherwise, emissions go up 50% (instead of down 50%)


Advantage of switching to lng

Advantage of Switching to LNG

Kg/MWh global emissions showing emissions of exporting economy at foot of columns

(Australian case)

Every tonne of

emissions from

LNG production avoids

more than 4 tonnes

globally

Fuel Source

Australian Emissions Global Emissions


Current gas industry concerns

Current Gas Industry Concerns

  • Key concern of customers: reliable supply at competitive price

  • Key concerns of developers: overheated construction market, escalating costs, difficulties with project approvals and uncertainty about the cost of carbon

  • Public trust in LNG must be maintained


Investment not trade barriers

Investment, Not Trade Barriers!

  • Barriers to natural gas trade?

  • Not really – they are more barriers to investment in new LNG capacity

  • Even then, they are not so much barriers as they are risks that discourage investors


Good policy settings essential

Good Policy Settings Essential

  • To encourage investment, good policy settings are essential

  • There must be certainty of application

  • This means the entire spectrum of policies that impact on investment stability: fiscal terms to environmental requirements


Climate policy

Climate Policy

  • Uncertainty is actually increasing

  • Dampening effect on investment

  • Risk that international climate regime will infringe on international trade regime

  • A sector-specific approach to reduction of emissions in LNG sector merits attention in international climate negotiations


Conclusions

Conclusions

  • Intersection of the international climate and trade regimes requires examination for its effect on APEC energy trade

  • Greater domestic use of natural gas, and increased cross-border natural gas trade, will benefit the global climate

  • Any domestic policy that inhibits natural gas investment is bad climate policy and bad for energy security


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