Natural Gas on the Energy Market in 2008
Overview of the global situation
The year 2008 also abounded in changes on the energy market: the price of crude oil changed significantly and the financial then at the end of the year the economic crises exercised their influence on the world’s energy usage. Last year the worlds’ energy consumption decreased by 5 PJ in comparison to the data in 2007. In August 2008 the world market price of the Brent quality crude oil was USD 147 per barrel while that of the crude oil was USD 98. However, in the second half of the year, due to decreasing demand the price of crude oil started to drop and it fluctuated around USD 40 in March this year. The International Energy Agency forecasts the price of crude oil in 2009 at an annual average of USD 52 due to the decrease in demand forming as a result of the world economy crisis.
These international energy industry processes also influenced the natural gas industry: while during the first half of the year a dynamic boom characterised the industrial sector, the upsurge was slowed down by the world economy crisis and other effects (such as the decreasing production in Canada, the North Sea region and Argentina, as well as the devastating hurricanes in the Gulf of Mexico) in the second half of 2008.
In conformity with the available aggregated date 3.055 billion cubic metres of natural gas was produced in 2008 worldwide, which means a 4 percent increase in comparison to last year’s level (2.984 billion cubic metres). Domestic production in aggregate increased in each region – except for the Pacific region – an approximately 4.5 percent increase could be witnessed in North America and Europe in comparison to last year’s data. The aggregated data of the OECD member states also reveal a – 4.12 percent – increase in production in comparison to last year’s basic data. The increase in production was most spectacular in the Middle East (by 6.2 percent) and Asia (by 5.3 percent). Last year the increase in natural gas consumption was typically in connection with the colder weather in the countries of the northern hemisphere, while with the increase in the demand of the industry, petrochemistry and power plants in several Asian countries (China, Vietnam, Thailand, Singapore, Indonesia, Malaysia, Bangladesh).
Natural Gas Trade
In 2008 natural gas trade increased by 3 percent and 23.3 percent of the produced quantity was transmitted through pipelines – similarly to last year – while the ratio of the liquefied natural gas (LNG) mounted to 7.4 percent. The increase in trade through a pipeline or in the LNG form have shown a more and more significant difference in the past years, since the average increase index of liquefied natural gas trade has been approximately 6 percent for years, while that of through pipelines only 3.3 percent, in spite of the fact that the LNG trade was characterised by a decreasing tendency – for the first time after three decades.
The successor states of the former Soviet Union, headed by Russia, still remained the most significant gas exporter countries. In conformity with the data by the National Bank of the Russian Federation in 2008 the Russian natural gas production increased to 195.4 billion cubic metres, which means an 0.05 percent increase in comparison to last year’s production. The quantity of natural gas traded in North America equates the data from last year (130 billion cubic metres), namely the 4 percent import demand decrease of the United States was balanced by the gas export from the USA towards Canada and Mexico, showing an upward tendency. Norway and Holland sold a record quantity of natural gas through pipelines in Europe, the former making an 8.7 percent increase and the latter making a 9.5 percent increase.
Natural gas production
On the basis of the aggregated data of the certain regions natural gas production increased in most regions of the world. The Pacific region, within which the decrease in Australia’s production exceeded 4 percent, can be mentioned as the only exception. Production increased by 7.64 percent in the United States, whereas it decreased by 4 percent in Canada. Although the aggregated European data indicate an increase in production, the downward tendency of the previous years was continuing in several Western European countries. Last year the rate of setback fluctuated between 9-10 percent in France, Spain and Sweden, while England was characterised by a slightly lower than forecast decrease of 3.33 percent.
In 2008 natural gas production was dynamically growing in the other regions as well, the quantity of natural gas brought to the surface grew spectacularly in Asia and the Middle East. The African continent was also characterised by a similar tendency, which is attributable to the growing international export (a 4-percent increase) and expanding demands within the region (a 5-percent increase). South America saw an extraordinary growth in production with stagnant production indices in Bolivia and Venezuela. Production grew by 28.4 percent in Brazil, by 27 percent in Peru and by 17.8 percent in Columbia.
Natural gas reserves
Proved recoverable natural gas reserves in the world were estimated at about 177.103 billion cubic metres at the end of 2008, and this estimates were slightly higher than one year before. On the first of January 2009 experts estimated the proved recoverable natural gas reserves of Russia to 47.572 billion cubic metres. The list of countries having the greatest reserves has not changed: out of the world’s proved recoverable natural gas reserves Russia is in the possession of 26 percent (2007: 25%), Iran of 15 percent (2007: 16%) while Qatar of 14 percent (2007: 14 %). In conformity with the most recent data the quantity of the proved recoverable natural gas reserves increased in the event of Iran and decreased in Qatar.
Source: International Energy Agency, Energy Information Administration, CEDIGAZ, Oil & Gas Journal