Energy market outlook 2012Alex Fergusson | Senior Policy Adviser | Energy

February 29 2012

The UK is increasingly dependent on imported gas

Source: DECC Digest of United Kingdom energy statistics 2011 2

Gas markets: the global contextA supply side glut?

Conventional gas supplies seem assured, but is Russia looking to sell eastward?

Unconventional gas: a global supply glut?

Shale LNG

3

Gas markets: the global contextDemand side pressures?

Source: International Energy Agency: World Economic Outlook 2011 4

Gas markets: the global contextDemand side pressures?

Germany: extra 16bcm by 2020

Italy, Switzerland

Japan: what future for nuclear?

Impact of Fukushima

Economic growth and increased demand

Environmental impact of coal

Demand increase to 500 bcm by 2035

China and the environment

Eurozone crisis

Oil indexation leading to decreased competitiveness

Push on renewables

European demand limits

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Gas markets: the global contextDemand side pressures? Germany

Source: International Energy Agency: World Economic Outlook 20116

Gas market outlookPrice prospects

Past: Russia all importantFuture: what happens to US production and Asian demand at least as important.

Source: Financial Times: Commodities Index February 20 2012 7

Oil markets: the global context

Iran and the EU embargo

The Arab Spring

Iraq: the supply side wildcard?

Supply side ‘events’

OPEC subsidies

China and India demand growth

Eurozone demand fragility

Energy efficiency: the demand side wildcard?

Demand side easing?

Global reserves: 50 to 55 years at current consumption

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Oil market outlookCurrent prices

25% below 2008 peak

Stock levels below long run average for fifth consecutive month pointing to upside price risk

Source: CBI analysis 9

Oil market outlookCurrent prices

Source: Financial Times: Commodities Index February 20 2012

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Oil market outlookFuture prices

Year WTI (USD/bbl) Brent (USD/bbl)

2012 105 115

2013 113 120

2014 117 123

2015 120 125

Source: CBI analysis 11

Electricity market outlook

12

Policy costs: Electricity Market Reform

Carbon costs: ITRE vote on ETS set aside Carbon floor price in NI?

Energy efficiency? Green Investment Bank