LNG Market in Asia - IBC€¦ · LNG Import Volume by Country The number of countries that import...
Transcript of LNG Market in Asia - IBC€¦ · LNG Import Volume by Country The number of countries that import...
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LNG Market in Asia
- A Japanese Perspective on the LNG Industry -
October 14th, 2016
Industry Research Department
1
Copyright © 2016 Mizuho Bank, Ltd.
Contents
1 Energy Policies in Japan P. 2
2 LNG Market from a Japanese Perspective P. 9
3 Natural Gas Hub Development in Asia P. 15
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0
100
200
300
400
500
600
Renewables
Nuclear
Coal
Gas
Oil
(Mtoe)
87%
92%92%
89%
85%
83%
82%
81%
82%
81%
88%
92%
92%
91%90%
88%
83%
80%
85%
90%
95%
Primary Energy Supply in Japan
In the past 40 years, Japan has gradually created a diversified energy portfolio in order to
strengthen its energy security.
Fossil fuels account for more than 80% of primary energy supply in Japan, playing an important role.
Primary energy supply in Japan
(Source) Compiled by Mizuho Bank Industry Research Department based on data from METI and IEEJ
(FY) (FY)
Energy Policies in Japan LNG Market from a
Japanese Perspective
Natural Gas Hub
Development in Asia
Fossil fuels’ share of primary energy supply in Japan
Oil crisis
Oil crisis Forecast Forecast
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0
20
40
60
80
100
120
140
Oil
Coal
LNG
(Mtoe)
0
200
400
600
800
1,000
1,200
RenewablesNuclearOilCoalLNG
(TWh)
34%31% 29% 1%
26% 24%29%
44%
11%9% 9%
14%
11%
11%8%
9%
18%26%
25%
32%
Electricity Generation by Source in Japan
To make up for the lost power generation from nuclear plants, fossil fuel fired plants,
especially LNG plants, have carried the load.
(Source) Compiled by Mizuho Bank Industry Research Department based on data from IEEJ and FEPC (The Federation of Electric Power Companies of Japan)
(Note) Renewables include hydropower. Oil includes LPG and other oil products. Based on figures for Japan’s 10 major electric power companies.
Japan’s electricity generation by source Fossil fuel consumption for electricity generation
(FY)
Great East
Japan Earthquake
Great East
Japan Earthquake
(FY)
Energy Policies in Japan LNG Market from a
Japanese Perspective
Natural Gas Hub
Development in Asia
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TEPCO28%
Chubu15%
Kansai10%
Other EPCOs14%
TokyoGas16%
Osaka Gas9%
Toho Gas3%
Other gas utilities 1%
Other4%
10 EPCOs
66%
Gas utilities29%
Japan'sLNG imports
(FY2014)89 Mt
JERA
(TEPCO+Chubu)
43%
Japan’s LNG Import Breakdown by Country Source and Importing Company
Japan’s LNG imports by source country Japan’s LNG imports by company
(FY)
54 54 55 59 58 58
63 68 68 66
71
83 87 88 89
84
0
10
20
30
40
50
60
70
80
90
(Mt)
Australia23%
Malaysia19%
Qatar16%
Russia 9%Indonesia 8%
UAE 7%
Brunei 5%PNG 5%
Other 10%
(FY)
(Source) Compiled by Mizuho Bank Industry Research Department based on data from the Trade Statistics of Japan (FEPC; The Federation of Electric Power Companies of
Japan) and Tex Report
(Note) EPCOs: Electric Power Companies
Japan has gradually diversified its LNG import portfolio.
Australia is the largest LNG source for Japan, accounting for 23% of LNG imports in FY 2015.
Power companies and gas utilities are major importers of LNG in Japan.
JERA, the JV between TEPCO and Chubu, accounted for 43% of Japan’s LNG imports in FY 2014.
Energy Policies in Japan LNG Market from a
Japanese Perspective
Natural Gas Hub
Development in Asia
5
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Japan’s Energy Policy Developments
(Source) Compiled by Mizuho Bank Industry Research Department from government documents
“Basic Energy Plan”
(Cabinet decision)
Energy & Environmental Policy
announced by DPJ
The Policy on Electricity
System Reform (report)
Great East Japan Earthquake,
Fukushima Accident
Change in Government
(DPJ→ LDP)
Former basic energy plan
Discussions and announcements made under the DPJ
(Democratic Party of Japan) administration
→ Zero nuclear was one option for the energy mix.
Plans for full deregulation and unbundling of the
electric power sector announced.
4th Basic Energy Plan
(Cabinet decision)
Fundamental Principles of Energy Policy: 3E + S
Energy Security, Economic Efficiency, Environment + Safety
Submission of Intended Nationally
Determined Contribution (INDC) for COP21
Jun. 2010
Mar. 2011
Dec. 2012
Sep. 2012
Apr. 2013
Apr. 2014
Jul. 2015
The Policy on Gas
System Reform (Report) Jan. 2015
Plans for full deregulation and third party access to
LNG regasification terminals etc. are announced.
GHG emission reduction of 26.0% by FY 2030
compared to FY 2013
Energy Mix in 2030
Long-term Energy Supply and Demand
Outlook (METI decision) Jul. 2015
Energy Policies in Japan LNG Market from a
Japanese Perspective
Natural Gas Hub
Development in Asia
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29%
43%
27%
25%
30%
26%
8%
15%
3%
29%
1%
20-22%
10% 11%22-24%
0%
20%
40%
60%
80%
100%
FY2010(Actual)
2013(Actual)
2030(Target)
Renewables
Nuclear
Oil
Coal
LNG
Electricity demand:
966.6 TWh
Electricity demand:
980.8 TWh
Energy conservation:196.1 TWh
0
200
400
600
800
1,000
1,200
FY2013(actual)
FY2030(target)
(TWh)
Power Generation Mix in FY 2030
To achieve 3E+S, the government will promote energy conservation, the increase in
renewable energy, and the improvement in thermal power efficiency.
(Source)Compiled by Mizuho Bank Industry Research Department from government documents
Generation mix targeted in FY 2030 Electricity demand in FY 2030
Economic growth:
+1.7% per annum -17%
compared to
BAU
Energy Policies in Japan LNG Market from a
Japanese Perspective
Natural Gas Hub
Development in Asia
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Japan’s Intended Nationally Determined Contribution (INDC) for COP21
(Source) Compiled by Mizuho Bank Industry Research Department from the government’s “Submission of Japan’s Intended Nationally
Determined Contribution (INDC)”
Japan’s INDC for FY 2030 is to reduce total GHG emissions by 26.0% compared to FY 2013.
Energy-originated CO2, which accounts for approximately 90% of GHG emissions in Japan, will be reduced by
25.0% compared to the FY 2013 level.
GHG reduction target in Japan’s INDC Overview of Japan’s INDC
Base years
• FY 2013 and FY 2005
– FY 2013 is the base year mainly used
for presenting Japan’s INDC
Target year • FY 2030
Total GHG emission • -26.0% compared to FY 2013
• -25.4% compared to FY 2005
Energy-originated
CO2
• -25.0% compared to FY 2013
• -24.0% compared to FY 2005
Non-energy-
originated CO2
• -6.7% compared to FY 2013
• -17.0% compared to FY 2005
Methane • -12.3% compared to FY 2013
• -18.8% compared to FY 2005
Nitrous oxide • -6.1% compared to FY 2013
• -17.4% compared to FY 2005
Fluorinated gases (HFCs, PFCs SF6,and NF3)
• -25.1% compared to FY 2013
• +4.5% compared to FY 2005
0
250
500
750
1,000
1,250
1,500
1,750
Other GHGs
Energy-originated CO2
(Mt-CO2eq)
0
250
500
750
1,000
1,250
1,500
1,750
Energy conversionTransportResidentialCommercialIndustry
(Mt-CO2eq)
(FY) (FY)
【Total GHG emission】 【Energy-originated CO2】
Target
Target
-25% -26%
Energy Policies in Japan LNG Market from a
Japanese Perspective
Natural Gas Hub
Development in Asia
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Deregulation of the Power and Gas Industry in Japan
(Source)Compiled by Mizuho Bank Industry Research Department from government documents
(Note)OCCTO: Organization for Cross-regional Coordination of Transmission Operators
Through electricity and gas system reform, the Japanese power and gas utility sectors will be
gradually deregulated.
2014 2015 2016 2020
Electricity
system
reform
【Jun.2014】
Publication of
Amended
Electricity
Business Act
【Apr.2015】
Establishment
of the OCCTO
【Apr. 2016】
Full retail
competition
2022 ・・・ 2017 ・・・
【Apr. 2020】
Unbundling of
T/D business
and full
liberalization of
retail rates
Chronology for Japan’s power and gas industry deregulation
Gas
system
reform
【Jun.2015】
Publication of
Amended Gas
Business Act
【Apr. 2017】
Full retail
competition
【Apr. 2022】
Unbundling of
pipeline
business
Energy Policies in Japan LNG Market from a
Japanese Perspective
Natural Gas Hub
Development in Asia
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LNG and Natural Gas Prices
Japan’s LNG import price has been higher than the natural gas prices in Europe and the U.S.
In particular, the natural gas price in the U.S. remains at a low level due to the production increase of shale gas.
The LNG spot price has seen a downtrend since 2014, and decreased to less than $5/MMBtu in March and April 2016.
One of the reasons for this decline may be looser demand/ supply conditions due to the start of production at new LNG projects.
LNG, natural gas and crude oil prices Japan’s LNG Import Price and Spot Price
Energy Policies in Japan LNG Market from a
Japanese Perspective
Natural Gas Hub
Development in Asia
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6
8
10
12
14
16
18
20
Japan LNG import price
Platts JKM
METI LNG spot price survey
(USD/MMBtu)
(Monthly)
0
5
10
15
20
25
(USD/MMBtu)
Crude oil price
(JCC)
Japan LNG import price
Europe
(NBP)
US(Henry Hub)
(Source) Compiled by Mizuho Bank Industry Research Department based on
data from EIA, the Trade Statistics of Japan, Platts and the METI’s
LNG spot price survey
(Source) Compiled by Mizuho Bank Industry Research Department based on
data from EIA and the Trade Statistics of Japan
(Monthly)
Canada
(AECO)
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LNG Import Volume
Global LNG import volume has increased with growing natural gas demand.
However, world LNG imports have remained fairly flat the past few years.
Global LNG import volume Change in LNG import volume (2015 vs 2014)
(Source) Compiled by Mizuho Bank Industry Research Department based on data from
GIIGNL
(Source) Compiled by Mizuho Bank Industry Research Department based on data from
GIIGNL and Cedigaz
0
50
100
150
200
250
Middle East
Americas
Europe
Asia and Oceania
(Mt)
(CY) -6 -4 -2 0 2 4 6
Thailand
Pakistan
China
Taiwan
Japan
South Korea
Other Asian countries
Asia total
Americas
Europe
Middle East
World
(Mt)
Energy Policies in Japan LNG Market from a
Japanese Perspective
Natural Gas Hub
Development in Asia
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LNG Import Volume by Country
The number of countries that import LNG has
more than tripled in the past ten years.
The top 5 LNG importing countries are all in Asia.
Combined LNG imports to Japan, Korea, China,
India and Taiwan accounted for 68% of global LNG
demand in 2015.
(Source) Compiled by Mizuho Bank Industry Research Department based on data from GIIGNL, BP and Cedigaz
Country Volume Share
Japan 35.2 66.4%
France 6.8 12.9%
Spain 3.3 6.2%
Belgium 2.9 5.4%
South Korea 2.3 4.3%
US 1.8 3.4%
Taiwan 0.7 1.3%
UK 0.04 0.1%
Italy 0.02 0.04%
Total 53.0 100.0%
Country Volume Share
Japan 53.4 52.9%
South Korea 14.5 14.4%
France 7.3 7.2%
Spain 6.1 6.0%
US 4.7 4.7%
Taiwan 4.4 4.4%
Italy 3.6 3.5%
Belgium 3.1 3.0%
Turkey 3.1 3.0%
Greece 0.3 0.3%
Puerto Rico 0.3 0.3%
Portugal 0.2 0.2%
Total 100.8 100.0%
Country Volume Share
Japan 70.9 32.2%
South Korea 32.6 14.8%
Spain 20.6 9.4%
UK 14.2 6.4%
Taiwan 11.2 5.1%
France 10.4 4.7%
China 9.6 4.4%
India 9.0 4.1%
US 8.2 3.7%
Italy 6.7 3.0%
Turley 5.6 2.6%
Belgium 4.4 2.0%
Mexico 4.3 1.9%
Chile 2.2 1.0%
Portugal 2.2 1.0%
Brazil 2.1 1.0%
Kuwait 2.0 0.9%
Argentina 1.3 0.6%
Canada 0.9 0.4%
Greece 0.7 0.3%
Dominican Rep. 0.6 0.3%
Puerto Rico 0.5 0.2%
UAE 0.1 0.05%
Total 220.2 100.0%
【1990】 【2000】 【2010】 【2015】
(Mt)
68% of
world LNG
imports
Country Volume Share
Japan 85.1 34.7%
South Korea 33.4 13.6%
China 20.0 8.2%
India 14.6 6.0%
Taiwan 14.5 5.9%
UK 10.1 4.1%
Spain 8.8 3.6%
Turkey 5.4 2.2%
Mexico 4.9 2.0%
Brazil 4.8 1.9%
France 4.4 1.8%
Italy 4.3 1.8%
Argentina 4.1 1.7%
Kuwait 3.0 1.2%
Chile 2.7 1.1%
Thailand 2.7 1.1%
Egypt 2.6 1.1%
UAE 2.2 0.9%
Indonesia 2.2 0.9%
Singapore 2.1 0.8%
Belgium 1.9 0.8%
Jordan 1.9 0.8%
US 1.7 0.7%
Malaysia 1.5 0.6%
Puerto Rico 1.2 0.5%
Portugal 1.1 0.4%
Pakistan 1.1 0.4%
Dominican Rep. 0.9 0.4%
Netherland 0.6 0.3%
Canada 0.5 0.2%
Greece 0.5 0.2%
Lithuania 0.3 0.1%
Sweden 0.3 0.1%
Israel 0.1 0.0%
Total 245.2 100.0%
LNG import volume by country
Energy Policies in Japan LNG Market from a
Japanese Perspective
Natural Gas Hub
Development in Asia
12
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13,559
17,934
-157
+1,133
+983
+709
+558
+482
+667
12,000
14,000
16,000
18,000
(Mtoe)
Global primary energy demand outlook
World primary energy demand is forecast to increase mainly due to growth in Asia.
Global natural gas demand is forecast to grow at 1.4% per annum through 2040.
Growth in natural gas demand is expected to be highest amongst fossil fuels.
予測
Energy Policies in Japan LNG Market from a
Japanese Perspective
Natural Gas Hub
Development in Asia
World primary energy demand by region (IEA)
India
Non-OECD Asia
+2,825 Mtoe
OECD
Other
(Source) Compiled by Mizuho Bank Industry Research Department by IEA “World Energy Outlook 2015”
(Note) TPED: Total Primary Energy Demand
Forecasts in New Policies Scenario
(CY)
South-
east
Asia etc
China Africa
Middle
East
World primary energy demand by source (IEA)
0
1,000
2,000
3,000
4,000
5,000
(Mtoe) CAGR (2013-40)TPED +1.0%
Oil +0.4%
Coal +0.4%
Natural gas +1.4%
Renewables+2.2%
Nuclear+2.3%
Forecast
(CY)
13
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Global electric power demand outlook
Asia’s electricity consumption expansion will contribute to global power demand growth.
As demand expands, natural gas-fired power generation is expected to increase at +2.1% per annum
through 2040.
Energy Policies in Japan LNG Market from a
Japanese Perspective
Natural Gas Hub
Development in Asia
予測 World electricity demand by region (IEA)
(CY)
(Source) Compiled by Mizuho Bank Industry Research Department by IEA “World Energy Outlook 2015”
(Note) Forecasts in New Policies Scenario
20,144
34,457
+1,872
+4,716
+2,391
+1,899
+1,170+883
+1,382
15,000
20,000
25,000
30,000
35,000
(TWh)Other
World electricity generation by source (IEA)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
RenewablesNuclearOilNatural gasCoal
(TWh)
CAGR (2013-40)Total generation
+2.0%
Coal +0.8%
Natural gas +2.1%
Oil -2.5%
Nuclear +2.3%
Renewables +3.6%
(CY)
Forecast
China
South-
east
Asia etc.
India Africa
Middle
East
Non-OECD Asia
+9,006 TWh
OECD
14
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700
600
500
400
300
200
100
0
+100
2013 2025 2040
Other AsiaSoutheast AsiaIndiaChinaJapan and KoreaTotal Asia
(Bcm)
(CY)
Asia total
Natural Gas Demand in Southeast Asia
Global natural gas demand is expected to increase 1.4% per annum until 2040.
Non-OECD Asia is expected to be a center of this demand growth.
In Asia, natural gas net import volume is going to increase.
Southeast Asia, which is currently a net gas exporter, is expected to become a net gas importer by 2040.
Asian natural gas net trade outlook (IEA)
(Source) Compiled by Mizuho Bank Industry Research Department from the
IEA’s “World Energy Outlook 2015” report
LNG regasification plant projects in Southeast Asia
Pagbilao
Son My
Thi Vai
Map Ta Phut
(expansion)
Pengerang
Batangas
Bojonegara
East Java
Central Java
(Cilacap)
Yet-unnamed
Lumut
North Java
Central Java
(Semarang)
Yet-unnamed
Lahad Datu
(Source) Compiled by Mizuho Bank Industry Research Department from IR and
JOGMEC materials
Energy Policies in Japan LNG Market from a
Japanese Perspective
Natural Gas Hub
Development in Asia
15
Copyright © 2016 Mizuho Bank, Ltd.
Actions for Natural Gas Hub Development in Asia
• At LNG Producer-Consumer Conference 2012,
Minister of Economy, Trade and Industry brought up
concept of LNG futures market
• From Nov 2012 to Mar 2013, Ministry of Economy, Trade
and Industry held “Conference for LNG futures”
• In Sep 2014, Japan OTC Exchange launched LNG
Non-Deliverable Forward Market
• At Energy Ministerial Meeting in May 2016, Japanese
government released “Strategy for LNG Market
Development”
– Goal: to give Japan status of an internationally
recognized hub by the early 2020s.
Japan
• In May 2013, SLNG received its first
commercial cargo and commenced
business operations
• In Jan 2016, SGX launched futures and
swaps linked to its index of spot LNG
prices “SLinG”
Singapore
Actions for natural gas hub development in Asia
Recently, natural gas hub development has been discussed in Asia.
The discussions have centered on Japan, the largest LNG importer, and Singapore, a commodity trading hub.
(Source) Compiled by Mizuho Bank Industry Research Department from IR materials
Energy Policies in Japan LNG Market from a
Japanese Perspective
Natural Gas Hub
Development in Asia
16
Copyright © 2016 Mizuho Bank, Ltd.
Conclusion
Last year, the Japanese government released its Long-term Energy Supply
and Demand Outlook. In the target “Energy Mix” therein, natural gas and
LNG remain positioned as strategically important sources for Japan.
Global LNG demand is expected to grow from a medium- to long-term
perspective, led by Asian countries’ demand growth.
With various LNG trade flows and LNG transaction types expected to
emerge, international collaboration is necessary to create a healthy LNG
market in the future.
Japan will cooperate with both LNG consumers in Asia and LNG producers
worldwide, in order to deal with the potential structural changes in the LNG
market.
17
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Disclaimer
© 2016 Mizuho Bank, Ltd. This document has been prepared solely for the purpose of providing financial solution information. This document is not a recommendation or solicitation for sales. Nor does it constitute an agreement to enter into transactions with any Mizuho Financial Group company. This document has been prepared based on information believed to be reliable and accurate. The Bank accepts no responsibility for the accuracy or appropriateness of such information. Upon using this document, if considered appropriate, or if necessary, please consult with lawyers, CPAs and tax accountants. © Mizuho Bank, Ltd. All Rights Reserved. This document may not be altered, reproduced or redistributed, or passed on to any other party, in whole or in part, without the prior written consent of Mizuho Bank, Ltd.