World Bank

1
Natural gasbridging fuel for the next
decades A global perspective Marcel Kramer,
Chairman and CEO Gasunie, The Netherlands

• World Banks Energy Week
• Washington DC, 6 March 2006

2
Global trends

• Fuel demand increases steadily

3
Total Energy Demand by Region 2002 and 2030
3500
3000
2500
2000
2002
Mtoe
2030
1500
1000
500
0
India
China
Africa
USA
EU-25
Russia
Japan/Korea
Middle East
Latin America
4
Regional shares in world primary energy demand
Two-thirds of increase in world demand in 2003 -
2030 comes from developing countries, especially
in Asia
Global energy demand forecast IEA
5
Gas demand is expected to grow faster than total
energy demand
Gas
Total primary energy
Reference yearIndex100
Global energy demand forecast IEA
6
Global trends

• Fuel demand increases steadily
• Gas is a relatively low CO2 emittor

7
Power generation is a major driver of the growth
in gas demand
18000
159
TOTAL PRIMARY ENERGY
16000
139
14000
118
12000
100
10000
Gas for Power
Mtoe
8000
54
6000
187
157
4000
123
2000
41
0
1971
2002
2010
2020
2030
Gas for other market segments
Global energy demand forecast IEA
8
Life-cycle CO2 emissions from Power Plants
1100
1000
spread due to type of coal (lignite/hard coal)
and technology (old/new-high-efficiency)
900
800
700
gram/kWh
600
500
400
300
200
CCGT as Back UP
100
0
gas
coal
wind
hydro
nuclear
solar pv
biomass
gas, CCGT
geothermal
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
9
Global trends

• Fuel demand increases steadily
• Gas is a relatively low CO2 emittor
• Large world gas reserves

10
Proven reserves 6,354 trillion cubic feet
.Shown in 1000 TCF
16.9
25.7
1.8
2.5
Europe
Russia
North America
4.9
Middle East
4.9
Asia Pacific Region
2.5
Africa
South and Central America
Current proven gas reserves equivalent of 67
years gas consumption (level 2004)
Data BP Statistical Review 2005
11
Global trends

• Fuel demand increases steadily
• Gas is a relatively low CO2 emittor
• Large world gas reserves
• Increased oil and gas prices

12
Gas price linkage to oil price

• Gas and Oil remain substitutes in major parts of
  the energy market
• Important parts of industry dual-fired
• Large hedging users prefer oil-related gas prices
• Upstream shackles of the gas and oil chains are
  very similar
• ? Gas Prices will remain linked to oil prices,
  but with their own volatility

13
Global trends

• Fuel demand increases steadily
• Gas is a relatively low CO2 emittor
• Large world gas reserves
• Increased oil and gas prices
• LNG projects allow for global competition in gas

14
LNG

• Gas importing regions will have to compete for
  supply
• LNG market still small (6,5 of gas is traded as
  LNG)
• Bottlenecks in LNG-chains till 2008 2010
• many large projects in execution phase
• Global price level of natural gas is so high that
  LNG is competitive wherever it originates from
• Traditional gas supply patterns (Russian gas to
  Europe, Mid Eastern gas to Pacific Rim, North
  America autarctic) will give way

15
Global trends

• Fuel demand increases steadily
• Gas is a relatively low CO2 emittor
• Large world gas reserves
• Increased oil and gas prices
• LNG projects allow for global competition in gas
• Markets develop to more competition and
  short-term contracts

16
Will world gas prices become more aligned?
Source M. Speltz, Chevron, sept 2005
17
Contribution of energy to economic growth
(1980-2001)
Average annual GDP growth () Contribution of factors of production and productivity to GDP growth ( of GDP growth) Contribution of factors of production and productivity to GDP growth ( of GDP growth) Contribution of factors of production and productivity to GDP growth ( of GDP growth) Contribution of factors of production and productivity to GDP growth ( of GDP growth)
Average annual GDP growth () Energy Labour Capital Total factor productivity
Brazil 2.42 77 20 11 -8
China 9.55 13 7 26 54
India 5.57 15 22 19 43
Indonesia 5.05 19 34 12 35
Korea 7.21 50 11 16 23
Mexico 2.19 30 60 6 4
Turkey 3.74 71 17 15 -3
United States 3.24 11 24 18 47
Sources IEA analysis based on IEA databases and
World Bank (2004).
18
Conclusions

• Energy supply important driver behind economic
  growth
• Gas is attractive fuel option
• Low Co2 emissions
• Global market
• LNG opens non-traditional gas markets
• Large global gas reserves
• Rapid growing gas market fosters liquidity and
  transparency
• Expanding gas infrastructure is pre-requisite for
  well functioning global gas market
• This requires a stimulating policy and regulatory
  framework
• predictable
• consistent
• transparent