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Analysis of the energy sector by QNB Group shows that global energy consumption grew by 2.5% in 2011 to the equivalent of 247m barrels of oil (boe) a day.

Oil itself remains the largest source of this energy, providing a third, with coal and gas close behind. Non-hydrocarbon energy sources—nuclear, hydro and other renewables—together only meet 13% of energy demand.

 The share of gas and non-hydrocarbons in total consumption was almost identical a decade ago.

The main change over that period is that the share of coal has increased by 6%, due to China’s rapid growth and exploitation of its domestic coal resources. As a result, oil’s share has fallen by 6%.

enGraph1_LNG GROWS IN IMPORTANCE

 International trade in hydrocarbons currently meets 35% of the world’s energy needs. Within this, the growth in the LNG trade is one of the most significant developments of the last decade. The volume of LNG traded grew at a rate of 8.8% a year over that period, more than triple the rate of overall energy consumption.

However, LNG contribution is still small compared to oil. Around 6m boe of LNG was traded every day in 2011, meeting about 2.4% of global energy usage, but this is barely a tenth the energy content of the oil trade. The oil figure is 55m barrels a day, including both crude oil and condensates from gas fields, according to data just released in British Petroleum’s annual Review of World Energy.

The proportion of hydrocarbons that are traded, rather than consumed in their countries of production, is large and rising. This is because there is a mismatch between the location of hydrocarbon reserves and the demand for their usage. The largest net demand is in Europe and East Asia, while much of the supply of oil and gas comes from the Middle East, Russia and Central Asia.

Oil is the most heavily traded hydrocarbon, both in energy terms and in proportion to its production. In 2011, 62% of oil pumped from the ground was exported, up from 57% a decade before. Only 31% of gas produced is traded, roughly a third of it as LNG.

This is partly because infrastructure required to ship LNG is more expensive than the equivalent established systems for transporting oil. However, improvements in LNG technology in the last decade have reduced the trading costs.

Coal is the least traded hydrocarbon, comprising only 14% of traded energy. This is because it is expensive to transport and because the bulk of global coal reserves are located in countries which need it to meet their own domestic energy demands, particularly China and the US.

  enGraph2_LNG GROWS IN IMPORTANCE

The growth in the LNG trade is demonstrated by the increasing number of countries involved in exporting or importing it. At the end of 2011, there were a total of 24 LNG liquefaction plants globally, with a rated capacity of 278m tonnes/year (mt/y). The actual volume traded increased by 20.7mt (9.4%) to 240.9mt, with two thirds of the increase coming from Qatar and the remainder from Yemen and Peru. Qatar exported 74.8mt in 2011, 31% of the global LNG supply.

 At the other end of the chain were 89 regasification terminals across 25 countries, with a combined capacity of 640mt/y, up 6.5% during 2011. In other words, the theoretical demand capacity is 2.3 times the currently available supply. A decade ago only 12 countries had regasification terminals.

 Asia remained the major import market for LNG in 2011, taking in 64% of the total supply, with over half of that bought by Japan, the world’s largest LNG importer, which purchased 79.1mt in 2011. This was an increase of 8.2mt on the previous year, due to the rise in demand for electricity from gas power stations following the shutdown of nuclear power plants in the aftermath of the tsunami.

These figures are based on data from the International Group of Liquefied Natural Gas Importers (GIINGL), the global industry body representing companies that import LNG.

GIINGL noted that the LNG market was able to cope with the demand surge from Japan largely as a result of the increased capacity in Qatar.

South Korea is the second largest LNG importer and increased its imports by 9% to 35.6mt in 2011. India and China saw stronger growth, at 37% and 36% respectively.

These two giant countries currently only import a relatively small amount of LNG, but the demand growth and the high utilisation rates of their regasification facilities are indications that they will become increasingly important LNG markets in the future.

The Middle East was the region with the fastest growth in LNG imports, with a 76% increase in supplies to Dubai and Kuwait, although they only represent 1.5% of the total LNG market. 

Elsewhere in the world, demand was weak during 2011. In Europe as a whole, imports increased by just 0.4%, although that followed an increase of nearly a quarter in 2010. Increased Qatari exports to the UK—which became the world’s third largest importer at 18.4mt—were largely offset by falling LNG demand in Spain and Turkey.

QNB Group expects that the LNG trade will continue to grow more rapidly than other components of the hydrocarbon sector. This will be helped by improvements in liquefaction and regasification technology, and as LNG is increasingly used as a cheaper and cleaner alternative to diesel by trucking fleets.


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