Factors influencing Australia’s
gas supply and demand
Mark Cully
Chief Economist
OfficeOffice
of theofChief
the Chief
Economist
Economist
8 March 2016
1
The long term energy outlook is uncertain, but gas has
best prospects amongst fossil fuels
Global annual demand growth to 2035
Forecasts show a wide
variation in energy
demand outlooks, but
gas demand grows in all
scenarios
•
Source: BP (2016) Statistical Review of World Energy 2015 and IEA (2015) World Energy Outlook
2
Global growth continues to disappoint
The IMF’s World Economic
Outlook forecasts have seen a
series of downgrades in 2014,
2015 and 2016.
Declining commodity prices,
increasing financial market
volatility and uncertainty
regarding growth in China have
weighed heavily on the outlook.
Global growth forecasts 2014, 2015 and 2016
4.2
Annual GDP growth (per cent)
Subdued global growth
could see commodity
prices remain soft
4
Forecasts for 2014
Forecasts for 2015
Forecasts for 2016
3.8
3.6
3.4
3.2
3
Release quarter and year of forecast
Note: The IMF releases a forecast every quarter for the current calendar year and two projection years.
Source: IMF World Economic Outlook (2014, 2015 and 2016)
3
Medium term outlook is affected by low commodity prices
Prices of key commodities
•
•
Source: IHS (2015), Platts (2015) and Bloomberg (2015)
4
Strong LNG demand growth in new markets, but a
growing excess of LNG capacity
LNG demand by country
500
LNG supply growth
exceeds demand growth
Total LNG supply capacity
400
Europe and China underpin
LNG demand, but the rest
of Asia shows the greatest
growth.
Bcm
300
200
100
2005
2007
2009
Japan
Rest of Asia
Total supply
•
2011
2013
South Korea
Europe
2015
2017
2019
China
Rest of World
Source: Department of Industry, Innovation and Science (2016) and Nexant (2015)
5
Global LNG markets are becoming more
fragmented and flexible
Shorter term LNG trades
LNG demand in the rest of Asia
•
100
110
100
90
80
70
60
50
40
30
20
10
0
2000
60
40
20
0
2010
2012
Chinese Taipei
Malaysia
2014
India
Pakistan
2016
2018
Indonesia
Singapore
2020
Sources: Department of Industry, Innovation and Science (2016) Gas
Market Report 2015 and Nexant (2015) World Gas Model
•
6
30
25
20
Bcm
Bcm
80
35
•
15
10
5
0
2002
2004
2006
2008
2010
2012
Source: International Gas Union (2015) World Gas Report
2014
Per cent
•
The eastern Australian market is undergoing a
major transformation
Gas powered generation demand in the eastern market
Total gas demand in the eastern market
•
•
250
2000
200
1500
PJ
PJ
150
1000
100
500
50
0
2010
2015
NSW
•
Vic
2020
SA
Tas
2025
Qld
Source: AEMO (2015) National Gas Forecasting Report
7
LNG
0
2010
QLD
2015
SA
2020
NSW
Vic
2025
Tas
2030
High Scenario
Investment into new supply will be needed,
despite falls in demand
Production capacity in the southern states
Production capacity in the northern states
•
•
500
500
450
450
400
400
350
350
300
PJ
PJ
300
250
250
200
200
150
150
100
100
50
50
0
2014
2016
Otways
NSW CSG
2018
2020
2022
Longford
Demand
2024
2026
2028
2030
0
2014
Other Vict
Source: Department of Industry, Innovation and Science (2016) Gas Market Report 2015
8
2016
Min
2018
2020
2022
Max
2024
2026
2028
Qld Demand
2030
Mark Cully
Chief Economist
Department of Industry, Science and Innovation
Phone: (02) 6102 8180
Email: [email protected]
Follow us @economist_chief
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