© OECD/IEA 2013

Towards an efficient LNG market in the Asia - PacificMaria van der HoevenExecutive Director10 September, 2013

© OECD/IEA 2013

For gas the Asian century is just starting

Asia Europe and USA-

500

1 000

1 500

2 000

2 500

3 000

coal gas

WEO 2012

Primary energy consumptionMtoe

© OECD/IEA 2013

Natural gas is the key to improving air quality in Asia

Osaka 1965 Osaka 2013

© OECD/IEA 2013

Economic growth and energy policies will raise the importance of Asia in global gas

2 010 2 015 2 020 2 025 2 030 2 035 0%

5%

10%

15%

20%

25%

30%

Due to geology and geography, LNG will have to play a dominant role in supplying Asia

Share of the Asia-Pacific in global gas demand

WEO 2012

© OECD/IEA 2013

The old business model is an increasing competitiveness burden

0

2

4

6

8

10

12

14

16

18

20

1991 1994 1997 2000 2003 2006 2009 2012

$201

2/M

Btu

US (Henry Hub)

Europe (German import)

Japan (LNG import)

© OECD/IEA 2013

Security issues, depletion and domestic demand growth lead to tight LNG supply

LNG liquefaction plantssecurity issuesdeclining gas outputsurging domestic demand

Supply shortfalls double the market impact of Japanese demand increase

© OECD/IEA 2013

New LNG supply is predominantly backed by long-term contracts

Portfolio LNG and secondary re-exports both play an increasing role

0

20

40

60

80

100

120

140

160

2013 2014 2015 2016 2017 2018

Portfolio LNG The rest of the world Other Asia

China Japan Capacity

bcm

© OECD/IEA 2013

Are oil and gas still substitute products?

2 010 2 015 2 020 2 025 2 030 2 035 -

500

1 000

1 500

2 000

2 500

3 000

oil gas

Oil and gas fired power generation in the Asia PacificTwh

WEO 2012

© OECD/IEA 2013

Is a destination clause still essential for project financing?

© OECD/IEA 2013

With non-conventional technology and new discoveries, resources will compete for markets

WEO 2007 WEO 20120%

5%

10%

15%

20%

25%

30%

35%

40%

45%

The proportion of proven reserves projected to be consumed till 2030

In 5 years discoveries and reserve additions exceeded production by 175 years worth of Japanese demand

© OECD/IEA 2013

The United States continues to lead non-conventional development

Technological improvements in seismic, drilling and fracking

“Mass manufacturing” methods in oil field services

Strong financial boost from liquids

With US markets saturated, Canadian production growth depends on LNG exports

© OECD/IEA 2013

North America is emerging as a major exporter

Can Henry Hub+ emerge as a price signal for Asia?

Projects with DOE approval or signed export contracts

LNG from other countries0

10

20

30

40

50

60

70

80

DOE Ap-proved

Freeport

Cove Point

Oman

Yemen

Egypt

Russia

Algeria

Contract signed

BCM

© OECD/IEA 2013

Russian gas: the East is the manifest destiny?

• Production constrained by EU and domestic demand• Surging independent production backed by NGLs• Asian exports depend on capital-intensive

infrastructure

Source: Gazprom. Note that political boundaries are not endorsed by the IEA

© OECD/IEA 2013

Facilitating market development

3rd party access and unbundling in gas AND electricity

Wholesale price liberalization

Flexible infrastructure Encouraging entry of new

supply Diversifying the primary

energy mix (nuclear, renewables)

Investment security and producer confidence needs to be maintained

© OECD/IEA 2013

Towards an efficient LNG market in the Asia - PacificMaria van der HoevenExecutive Director10 September, 2013