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World Bank’s Energy Week Washington DC, 6 March 2006

Natural gas:”bridging fuel “ for the next decades A global perspective Marcel Kramer, Chairman and CEO Gasunie, The Netherlands. World Bank’s Energy Week Washington DC, 6 March 2006. Global trends . Fuel demand increases steadily . Total Energy Demand by Region 2002 and 2030. 3500. 3000.

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World Bank’s Energy Week Washington DC, 6 March 2006

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  1. Natural gas:”bridging fuel “ for the next decades A global perspective Marcel Kramer, Chairman and CEO Gasunie, The Netherlands World Bank’s Energy Week Washington DC, 6 March 2006

  2. Global trends • Fuel demand increases steadily

  3. Total Energy Demand by Region 2002 and 2030 3500 3000 2500 2000 2002 Mtoe 2030 1500 1000 500 0 India Africa China EU-25 USA Russia Middle East Japan/Korea Latin America

  4. Regional shares in world primary energy demand Two-thirds of increase in world demand in 2003 - 2030 comes from developing countries, especially in Asia Global energy demand: forecast IEA

  5. Gas demand is expected to grow faster than total energy demand…… Gas Total primary energy Reference yearIndex=100 Global energy demand: forecast IEA

  6. Global trends • Fuel demand increases steadily • Gas is a relatively low CO2 emittor

  7. Power generation is a major driver of the growth in gas demand 18000 159 TOTAL PRIMARY ENERGY 16000 139 14000 118 12000 100 10000 Gas for Power Mtoe 8000 54 6000 187 157 4000 123 2000 41 0 1971 2002 2010 2020 2030 Gas for other market segments Global energy demand: forecast IEA

  8. Life-cycle CO2 emissions from Power Plants 1100 1000 spread due to type of coal (lignite/hard coal) and technology (old/new-high-efficiency) 900 800 700 gram/kWh 600 500 400 300 200 CCGT as Back UP 100 0 gas coal wind hydro nuclear solar pv biomass gas, CCGT geothermal Sources: life-cycle assessment of electricity generation systems and applications for climate change policy analysis, Meier, 2002, published on website Nuclear Energy Institute; own data; IEA

  9. Global trends • Fuel demand increases steadily • Gas is a relatively low CO2 emittor • Large world gas reserves

  10. Provenreserves: 6,354 trillion cubic feet .Shown in 1000 TCF: 16.9 25.7 1.8 2.5 Europe Russia North America 4.9 Middle East 4.9 Asia Pacific Region 2.5 Africa South and Central America Current proven gas reserves equivalent of 67 years gas consumption (level 2004) Data: BP Statistical Review 2005

  11. Global trends • Fuel demand increases steadily • Gas is a relatively low CO2 emittor • Large world gas reserves • Increased oil and gas prices

  12. Gas price linkage to oil price • Gas and Oil remain substitutes in major parts of the energy market • Important parts of industry dual-fired • Large hedging users prefer oil-related gas prices • Upstream shackles of the gas and oil chains are very similar  Gas Prices will remain linked to oil prices, but with their own volatility

  13. Global trends • Fuel demand increases steadily • Gas is a relatively low CO2 emittor • Large world gas reserves • Increased oil and gas prices • LNG projects allow for global competition in gas

  14. LNG • Gas importing regions will have to compete for supply • LNG market still small (6,5% of gas is traded as LNG) • Bottlenecks in LNG-chains till 2008 – 2010 • many large projects in execution phase • Global price level of natural gas is so high that LNG is competitive wherever it originates from • Traditional gas supply patterns (Russian gas to Europe, Mid Eastern gas to Pacific Rim, North America autarctic) will give way

  15. Global trends • Fuel demand increases steadily • Gas is a relatively low CO2 emittor • Large world gas reserves • Increased oil and gas prices • LNG projects allow for global competition in gas • Markets develop to more competition and short-term contracts

  16. Will world gas prices become more aligned? Source: M. Speltz, Chevron, sept 2005

  17. Contribution of energy to economic growth (1980-2001) Sources: IEA analysis based on IEA databases and World Bank (2004).

  18. Conclusions • Energy supply important driver behind economic growth • Gas is attractive fuel option • Low Co2 emissions • Global market • LNG opens non-traditional gas markets • Large global gas reserves • Rapid growing gas market fosters liquidity and transparency • Expanding gas infrastructure is pre-requisite for well functioning global gas market • This requires a stimulating policy and regulatory framework: • predictable • consistent • transparent

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