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GLOBAL SUPPLY AND DEMAND FOR NATURAL GAS May 15, 2012

STRIKING A BALANCE IN THE MIDST OF CHANGE May 13-16, 2012 Québec City, Québec (Canada). GLOBAL SUPPLY AND DEMAND FOR NATURAL GAS May 15, 2012. Presented by: SERGEY PALTSEV Principal Research Scientist Massachusetts Institute of Technology. MOTIVATION. Shale Gas LNG and Global Market

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GLOBAL SUPPLY AND DEMAND FOR NATURAL GAS May 15, 2012

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  1. STRIKING A BALANCE IN THE MIDST OF CHANGE May 13-16, 2012 Québec City, Québec (Canada) GLOBAL SUPPLY AND DEMAND FOR NATURAL GASMay 15, 2012 Presented by: SERGEY PALTSEV Principal Research Scientist Massachusetts Institute of Technology

  2. MOTIVATION • Shale Gas • LNG and Global Market • Move from Coal to Gas • Move to Renewables • Economics vs Geopolitics

  3. MAJOR POINTS • Global natural gas use will grow from the current 110 Tcfto 160 Tcf in 2030, and 180-190 Tcf in 2050. • Gas markets are still regional (U.S., Europe, Asia) • Integrated gas markets lead to an even greater use and relatively lower prices.

  4. MAJOR POINTS (Cont.) • Watch for surprises • -U.K. gas • -U.S. gas • -Poland gas • -China gas • U.S. - $2-4, Europe - $8-10, Japan - $15: A case for long-termsubstantialU.S gas exports? • -Maybe not. • Shale gas in China might be a game changer • -But perhaps not in the next decade

  5. NATURAL GAS PRICES, BP (2011) Winter 2011-2012 Prices: US – (Sept - $4; March - $2), UK - $10 (NBP on Oct 3 – $6.50; Feb 7 - $15.50, end of March - $9.40), Germany - $11, Japan - $15-16.

  6. GLOBAL NATURAL GAS USE

  7. NATURAL GAS RESOURCES Source: MIT (2011) Global Consumption: 2000 - 100 Tcf 2050 – 160-190 Tcf Global Reserves: 6,600 Tcf (BP, 2010) Global Resources: World – 16,000 Tcf (plus shale gas in non-North America)

  8. INTERNATIONAL GAS MARKET DEVELOPMENT, 2030 Regional Markets Source: MIT (2011) Global Market

  9. NATURAL GAS IN EUROPE GHG policy and nuclear power reduction change the prospects Source: MIT Joint Program Report 201 (2011)

  10. NATURAL GAS IN ASIA Even more uncertainty Government support Use in residential sector (heating and cooking) and industry Source: MIT Joint Program Report 201 (2011)

  11. SHALE GAS RESOURCES Source: EIA (2011) No estimate for Russia or the Middle East Global Resources: 16,000 Tcf Additional Shale : 6,000 Tcf Global Resources: 22,000 Tcf Poland: IEA (2011) – 187 Tcf Poland Government (2012) - 12-28 Tcf; Might be up to 67 Tcf

  12. SHALE GAS IN CHINA Source: EIA (2011)

  13. (NO) SHALE GAS IN CHINA AND GLOBAL SUPPLY Source: Paltsev, Ejaz, O’Sullivan (2012)

  14. SHALE GAS IN CHINA AND GLOBAL SUPPLY Source: Paltsev, Ejaz, O’Sullivan (2012)

  15. CHINA GAS – POTENTIAL FUTURES Shale gas availability changes gas prospects in China Consumption Production

  16. CHINA GAS – POTENTIAL FUTURES Imports By 2050 China might become natural gas exporter

  17. MAJOR POINTS • Global natural gas use will grow from the current 110 Tcfto 160 Tcf in 2030, and 180-190 Tcf in 2050. • Gas markets are still regional (U.S., Europe, Asia) • Integrated gas markets lead to an even greater use and relatively lower prices. • Watch for surprises • -U.K. gas; U.S. gas; Poland gas; China gas • U.S. - $2-4, Europe - $8-10, Japan - $15: A case for long-termsubstantial U.S gas exports? • -Maybe not. • Shale gas in China might be a game changer • -But perhaps not in the next decade

  18. THANKS ARE DUE • QudsiaEjaz • Francis O’Sullivan • Ernest Moniz • John Reilly • Henry Jacoby • Tony Meggs • Jim Jensen Picture: toonpool.com

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