This publication includes our Annual Energy Aspects Gas Prize Crossword
2017 was another step in the direction of greater globalisation of the gas markets. There were many big events, but the most unmissable theme was the growth in Asian gas demand.
The LNG markets largely delivered as promised, with 25 Mt of the incremental 30 Mt we were expecting at the start of the year actually arriving. This year saw LNG trains start at Gorgon (T1), Sabine Pass (T3 & T4), Wheatstone (T1) and Yamal (T1). Towards the end of the year, the first trains at Cove Point and Yamal also put first LNG onto the water. Yet there was demand to meet all of that new supply, and nowhere was this quite as important as China. The environmental benefits of using gas rather than coal as a fuel drove China’s policymakers to support an expansion in gas demand, at a pace not even its supply infrastructure expansion could fully meet. With South Korea and South Asia both contributing to growth in demand for LNG, the global gas market was tighter than expected. That Chinese growth, which looks sustainable over the next few years, has shortened expectations on how long the market will be over-supplied.
In North America, US output roared back in 2017 as more rigs and the continued march of production efficiencies helped production set some new records. This followed a 2016 in which production dropped y/y for the first time since shale became a revolution. Key to growth in 2017 was the ongoing debottlenecking of Northeast US gas production. With several big pipelines still to come online in the US northeast, further big y/y production gains are expected for 2018.
In Europe, the failure of incremental LNG supply to be a torrent—it was more of a gentle wave—did not stop the NW European markets from being largely well supplied. Production was big in Europe, with key suppliers Norway and Russia both having strong years. The demand side was buoyed by sustained outages at French nuclear power plants and low hydro levels in southern Europe. Many of these are trends are set to also feature going into 2018.
We look forward to providing you with more analysis in 2018. The team is always happy to answer your questions—you can find our details on page 3. After the festive break, we’ll be with you every step of the way, from fuel-switching to the next LNG supply wave. In the meantime, we leave you with our 2017 Energy Aspects crossword. Good luck and happy holidays!