IEA 2019. All rights reserved.

IEA Oil and Gas Market Outlook

Dagmar Graczyk, Energy Policy and Security Division, IEA

Sendai, 11 April – 2nd APEC EGCFE – Oil and Gas Meeting

IEA

2 IEA 2019. All rights reserved.

Long-term Market Outlook Key takeaways from WEO 2018

3 IEA 2019. All rights reserved.

Context

Mixed signals about the pace & direction of change in global energy:

Oil markets are entering a period of renewed uncertainty & volatility

Natural gas is on the rise: China’s rapid demand growth is erasing talk of a ‘gas glut’

For the first time, the global population without access to electricity fell below 1 billion

Electricity is carrying great expectations, but questions remain over the extent of its

reach in meeting demand & how the power systems of the future will operate

Policy makers need well-grounded insights about different possible futures & how

they come about.

4 IEA 2019. All rights reserved.

2000

1 000 2 000 3 000 4 000

United States

European Union

China

Africa

India

Southeast Asia

Middle East

Mtoe

2001

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2002

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2003

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2004

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2005

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2006

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2007

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2008

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2009

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China

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India

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2010

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China

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2011

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China

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2012

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China

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2013

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China

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2014

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China

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2015

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China

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2016

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China

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2017

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China

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2018

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China

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2019

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2020

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Mtoe

The new geography of energy

Energy demand

In 2000, more than 40% of global demand was in Europe & North America and some 20% in developing economies in Asia. By 2040, this situation is completely reversed.

2021

1 000 2 000 3 000 4 000

China

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2022

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2023

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2024

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2025

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2026

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2027

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2028

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2029

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2030

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2031

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2032

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2033

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2034

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2035

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2036

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2037

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2038

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2039

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2040

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2040

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Mtoe

By 2040, this situation is completely reversed.

5 IEA 2019. All rights reserved.

Robust growth in global oil demand, driven by petrochemicals

The petrochemical industry is the main driver of global oil demand growth, accounting for over a third

of the increase in oil demand to 2030

9.6

0.6 1.6

1.7

2.5

3.2

0

2

4

6

8

10

Shipping/other

Passengervehicles

Aviation Road freight Petrochemicals Growth2017-2030

mb/d

Oil demand growth to 2030

6 IEA 2019. All rights reserved.

Can US shale alone avoid a turbulent oil market?

Global oil outlook

Oil demand looks robust in the near term; if approvals of new conventional projects remain low, market stability would require continuous exceptional growth in US shale

65

70

75

80

85

90

95

100

105 mb/d

Growth required from US shale

Growth from other sources (at current project approval rates)

Demand

2010 2015 2020 2025

Currently producing fields

7 IEA 2019. All rights reserved.

Growing gas import requirements in developing Asia, Japan and Korea are largely met by LNG, with

Africa a key emerging player in global gas markets

LNG ushers in a new global gas order

770 bcm in 2017

Gas exporters

42% shipped by LNG

1 290 bcm in 2040

59% shipped by LNG

Russia & Caspian Other Australia

Middle East Africa

US & Canada Australia

Russia & Caspian

Middle East

Other

Africa

US & Canada

8 IEA 2019. All rights reserved.

Shares in long-distance

gas trade, 2017

Pipeline

China – the emerging giant of gas demand

Developing countries in Asia – led by China – dominate the rise in long-distance gas trade;

Net gas imports in 2017

-100

0

100

200

300

400

China European Union

Japan & Korea

India Southeast Asia

bcm

Net gas imports in 2040

LNG

Shares in long-distance

gas trade, 2040

more than 80% of the growth to 2040 comes in the form of LNG

9 IEA 2019. All rights reserved.

Oil Market (Mid-term)

10 IEA 2019. All rights reserved.

US expansion is 70% of global growth. Gains in Brazil, Iraq, Norway, the UAE and Guyana.

Main declines in Iran and Venezuela.

US leads the way in global supply growth

Change in total oil supply 2018-24

US

Brazil

Iraq

Norway

UAE

Guyana

Iran

Venezuela

-2

-1

0

1

2

3

4

5

mb

/d

11 IEA 2019. All rights reserved.

China eases on shift to consumer economy and environmental policies. India’s volume growth similar to

China by 2024. Middle East fuel oil demand boosted. US demand steady.

Oil Demand growth 1.2 mb/d per year, no peak in sight

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

2018 2020 2022 2024

mb

/d

Rest of the world

Middle East

India

China

World oil demand growth

12 IEA 2019. All rights reserved.

Gas Market (Mid-term)

13 IEA 2019. All rights reserved.

Industry & buildings have taken over from the power sector as the drivers of gas demand;

China accounted for 30% of the increase in global gas demand in 2017

Growth in global natural gas demand

Natural gas – life in the fast lane

bcm

2000-2016 average

2017

30

60

90

120 Industry, buildings & others

Power generation

14 IEA 2019. All rights reserved.

China dominates world gas consumption growth

Global consumption passes the 4 tcm mark by 2022

China to account for almost 40% of growth driven by clean air policy target

World natural gas consumption growth for selected countries and regions, 2017-23

14

bcm -20 0 20 40 60 80 100 120

Russia

Japan

Europe

Latin America

Africa

India

United States

Middle East

China

15 IEA 2019. All rights reserved.

The United States accounts for a third of growth in global natural gas production to 2025

Natural gas production growth for selected countries and regions, 2018-2025

and two-thirds of anticipated growth in LNG exports

-50

0

50

100

150

200

US Russia Middle East China Australia East Africa Europe

bcm

Domestic market Export market

The US takes the lion’s share of the growth in global gas supply

16 IEA 2019. All rights reserved.

Global LNG market reaches 500 bcm mark by 2023

LNG trade passes 500 bcm mark by 2023, reaching almost 40% of global gas trade from around a third

today; Developing Asian markets account for almost half of LNG market by 2023

LNG imports by region, 2013-23

16

Other Asia and Pacific Japan and Korea Other Atlantic Basin and Middle East

China Europe

bcm

0

100

200

300

400

500

600

2013 2015 2017 2019 2021 2023

17 IEA 2019. All rights reserved.

Conclusions for Mid-Term Oil and Gas Markets

• The links between energy & geopolitics are strengthening & becoming

more complex, a major factor in the outlook for energy security

• Global oil demand growth to slow modestly with petrochemicals a key

driver

• Global upstream investment set to extend a modest upturn in 2019,

including a welcome uptick in spending on conventional assets

• The gas industry’s future remains bright, but it is not without challenges

• Gas price competitiveness & market reforms in emerging markets

18 IEA 2019. All rights reserved.

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