Interregional trade

Inter-regional natural gas trade (between major WEO regions) is projected to more than double over the projection period, from 441 bcm in 2006 to around 1 tcm in 2030 (Table 4.3). Trade rises much faster than demand, due to the pronounced geographical mismatch between resource location and demand. As a result, regional gas markets become more integrated as trade in LNG expands and new long-distance and undersea pipelines enable more gas to be traded between regions.

Imports rise in all the regions (with the exception of non-Russia Eurasia) that are currently net importers of gas, both in volume and as a share of total gas consumption (Table 4.3). The European Union sees the biggest increase in net import volumes, from 305 bcm in 2006 to about 580 bcm in 2030. Its reliance on imports rises from 57% of its total gas needs to 86% over that period. Most of the increase is met by Russia, Africa and the Middle East. North America, which is almost self-sufficient in gas at present, emerges as a major importing region during the projection period as demand outpaces production. Imports from Africa, Latin America and the Middle East, mostly into the United States, reach a combined 140 bcm in 2030. OECD Asia (Japan and Korea) is already highly reliant on imports to meet its gas needs. Its net imports, from non-OECD Asian countries, the Middle East, Australia and Russia (Sakhalin), rise by more than half between 2006 and 2030. Imports into China also increase sharply, covering just under half of the country's gas needs in 2030. India's imports also grow markedly, meeting more than 60% of total gas demand by 2030.

Most of the additional exports over 2006-2030 come from the Middle East and Africa. Together, they account for 59% of total gas exports in 2030. Exports from Africa are projected to almost triple, from 99 bcm in 2006 to over 280 bcm in 2030, while those from the Middle East increase six-fold, from 55 bcm to about 320 bcm. African countries' exports to Europe grow strongly. The Middle East increases its net exports to all the main consuming markets except China: Europe, North America, OECD Asia and India. Most of the additional exports from Africa and the Middle East are in the form of LNG. Russia and the Caspian/Central Asian countries collectively make up the other main exporting region. This region increases its exports to Europe by 14% and starts to export to China and OECD Asia. Russia's total net exports rise from 198 bcm in 2006 to 270 bcm in 2030. Apart from the Sakhalin project, all exports from Russia and the Caspian/Central Asia are via pipeline.

Worldwide, LNG flows have doubled in the past decade and now meet 7% of total world demand for natural gas. The share of LNG in total trade between WEO regions continues to grow steadily through the Outlook period, from 52% in 2006 to 69% in 2030 (Figure 4.7).4 The volume of LNG trade reaches 340 bcm in 2015 and around 680 bcm in 2030 - up from only 201 bcm in 2006. LNG accounts for 80% of the increase in interregional trade.

4. The share of LNG in total international trade is significantly lower, as most intra-regional trade is by pipeline. LNG is generally the cheaper means of transport over long distances.

Figure 4.6 • Main net inter-regional natural gas trade flows in the Reference Scenario, 2006 and 2030

(billion cubic metres per year)

Figure 4.6 • Main net inter-regional natural gas trade flows in the Reference Scenario, 2006 and 2030

(billion cubic metres per year)

Major Gas Trade Flows

□ OECD North America □ OECD Europe □ Middle East □ China

2006 ^^ 2030 I I Latin America ^M Eastern Europe/Eurasia I I India I I Other Asia

The boundaries and names shown and the designations used on maps included in this publication do not imply official endorsement or acceptance by the IEA.

Figure 4.7 • World inter-regional natural gas trade* by type in the Reference Scenario

Figure 4.7 • World inter-regional natural gas trade* by type in the Reference Scenario

East Asian Inter Regional Trade

2006 2015 2030

*Trade from major WEO regions, not including international trade within each region.

2006 2015 2030

*Trade from major WEO regions, not including international trade within each region.

The pattern of world LNG trade is set to change markedly. Until now, LNG trade has been confined largely to the Asia-Pacific region, with gas sourced within Asia and in the Middle East. Although this market continues to expand, LNG demand from Atlantic Basin markets increases even more over the projection period, so that flows from Africa and the Middle East to Europe and North America quickly overtake those flowing eastwards. OPEC countries, especially in Africa and the Middle East, dominate the growth in supply of LNG through to 2030 (Figure 4.8). At the end of 2007, there were 24 liquefaction terminals in operation worldwide, with a total capacity of 256 bcm per year. An additional 146 bcm/year of capacity is under construction, which will take total capacity to around 400 bcm/year by 2012 (Table 4.4). Another 417 bcm/year of capacity is in the planning stage, though many of the planned projects have been on the table for several years. If only half of this planned capacity is built, total capacity would reach over 600 bcm/year.

Figure 4.8 • Inter-regional exports* of LNG by source in the Reference Scenario

Figure 4.8 • Inter-regional exports* of LNG by source in the Reference Scenario

Lng Australia Export Projection

OECD

Other non-OECD Africa Middle East

2006 2015 2030

* Net exports of LNG from major WEO regions, not including international trade within each region.

OECD

Other non-OECD Africa Middle East

CD td

2006 2015 2030

* Net exports of LNG from major WEO regions, not including international trade within each region.

Table 4.4 • Natural gas liquefaction capacity (billion cubic metres per year)

Capacity end-2007* Capacity under construction** Projected capacity in 2012***

Table 4.4 • Natural gas liquefaction capacity (billion cubic metres per year)

Capacity end-2007* Capacity under construction** Projected capacity in 2012***

OECD

23

18

41

Australia

21

13

34

Norway

-

5

5

United States

2

-

2

Non-OECD

233

128

361

Algeria

28

6

34

Angola

-

7

7

Brunei

10

-

10

Egypt

16

-

16

Equatorial Guinea

1

3

4

Indonesia

38

10

48

Libya

1

-

1

Malaysia

31

2

33

Nigeria

25

6

31

Oman

15

-

15

Peru

-

6

6

Qatar

40

65

105

Russia

-

13

13

Trinidad and Tobago

21

-

21

UAE

8

-

8

Yemen

-

9

9

World

256

146

402

OPEC

139

94

233

* Capacity at liquefaction facilities commissioned in 2007 is included in the column under construction as they are not yet operated at full capacity.

** Includes ramping up capacity at liquefaction facilities commissioned in 2007 and capacity additions by debottlenecking.

*** Planned and proposed capacity not under construction. Source: IEA (2008).

CHAPTER 5

COAL MARKET OUTLOOK

Since 2000, global coal consumption has grown faster than any other fuel, despite higher prices, by 4.9% per year between 2000 and 2006. Most of this growth occurred in non-OECD countries. Coal demand is projected to grow by 2% per year over the Outlook period, faster than total energy demand. NonOECD countries account for 97% of the increase in global coal demand over the Outlook period, with China alone accounting for two-thirds of the increase and India for a further 19%.

To meet growing demand, coal production is projected to rise by almost 60% between 2006 and 2030. Around 90% of this increase comes from non-OECD countries. China almost doubles its output, while India's production more than doubles. Russian production jumps by nearly 75%, overtaking that of OECD Europe.

Proven remaining reserves are more than adequate to meet the growth in coal use projected to 2030. The United States, Russia and China together account for around 60% of world reserves. However, large investments are needed in prospecting (to identify economically recoverable reserves) and in new mining projects.

Global trade in coal between WEO regions rises from 613 million tonnes of coal equivalent today to around 980 Mtce by 2030. Despite a sharp decline in its coal exports, China remains a net exporter at present, but becomes a net importer in the near future, with net imports rising to 88 Mtce by 2030. India's imports grow by 7% per year to 220 Mtce, overtaking Europe to become the world's second-largest net importer after OECD Asia.

Coal prices have kept pace with increases in oil and natural gas prices in recent years. The spot price of steam coal delivered to ports in Europe and Asia rose to above $100 per tonne in 2007 and continued to rise steeply in 2008. Coal-supply costs have also risen dramatically, due to sharp increases in the cost of materials, equipment, diesel, labour and shipping. Projected cumulative investment in coal-supply infrastructure totals about $730 billion between 2007 and 2030 (in year-2007 dollars), 91% of which is required for mines, and the rest for ports and shipping.

Carbon dioxide emissions from coal combustion are set to rise from 11.7 gigatonnes in 2006 to 18.6 Gt in 2030, driving up coal's share of total emissions from 42% to 46%. Carbon capture and storage technology has the potential to reduce greatly CO2 emissions from coal use in the long term, but has only a small impact before 2030 in the Reference Scenario.

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