Cedigaz Sec. Gen. Marie-Françoise Chabrelie said it had not been foreseen that rising gas prices would stimulate producing countries as much as it had. Chabrelie said LNG accounted for much of the world gas trade growth.

Marketed gas production

Preliminary figures for world marketed gas production reached 2,930 billion cu m (bcm), up 2.9% over the revised 2005 figure of 2,848 bcm and driven by buoyant activity in a context of tension in the world energy market as oil prices remained at $65/bbl on average.

Although repairs of damage wrought by 2005 hurricanes continued well into 2006, US gas production grew by 2.3% to 523.6 bcm in 2006 within the full US-Canada production of 754 bcm. The decline of Gulf of Mexico production due to lingering production facility and pipeline damage was offset by major increases in onshore gas production.

In the former Soviet Union, Russian gas production increased by 2.4% to 656.2 bcm. Gazprom accounted for 83.9% of this with a 0.4% rise to 550.2 bcm. Oil companies and independent gas companies produced 104.8 bcm, a 12.1 bcm increase over 2005 accounting for the bulk of the Russian gas production increase.

Marketed gas production in Europe, which includes EU-25, Norway, Switzerland, and Turkey, dropped 2.2% to 291.9 bcm. While Norway"s gas production increased 4% to about 90.5 bcm, sharp declines were noted in most other countries in the region, the largest by 8.6% in the UK where gas production continued the decline started in 2001. In the Netherlands, lower sales on the domestic market led to a 1.7% production drop.

In contrast, dynamic local markets and exports resulted in gas production increases in Latin America, with a 4.5% production increase to 143.3 bcm; the Middle East with a 5% production upsurge to 328.2 bcm; and Africa with a 9.9% production hike to 190.5 bcm.

Asia-Oceania marketed gas production posted an estimated 4.3% production hike to 377 bcm.

World gas pipeline trade

While world gas trade averaged a 5.4%/year increase over the past decade, in 2006 international trade grew by "a very modest" 2.5% to 886 bcm. This was due to stagnating pipeline flows, including intra-FSU trade, which fell 1.1% to a tentatively estimated 128 bcm.

Pipeline flows in and to Europe and in North America dominate 54.3% of the total world gas trade. Last year, Canadian exports to the US fell 4.7% to about 100 bcm and accounted for about 57% of Canada"s gas production. US gas imports from Canada represented 16.1% of its total gas supplies and 81.3% of its imports. Mild weather reduced residential consumption, which was offset by gas-fired electric power plants that came on stream in recent years.

Europe"s total gas supplies last year increased by 0.7% to 542 bcm, a figure that includes the region"s own production, which accounted for 54% of its overall supplies. However, despite the startup of two new gas lines to supply the UK in fourth-quarter 2006—Langeled from Norway and BBL from the Netherlands—lower demand in the region due to mild weather slowed down the region"s pipeline trade.

With about 84 bcm exported to the continent and the UK, up 3.2% over 2005, Norway accounted for 15.5% of Europe"s total gas supplies. Gas exports from the Netherlands rose by an estimated 4% to about 48.6 bcm. Russia"s gas exports to European countries, including Central Europe, remained unchanged from the previous year at 151.6 bcm. Pipeline gas from Africa to Europe increased 2.2% to 43.3 bcm.

LNG trade

Within the world gas trade, which now accounts for 30.2% of world marketed production, the share of LNG (including intra-FSU trade) was 23.8% and accounted for 7.2% of total volumes produced. Last year LNG trade posted a brisk 11.7% growth to 211 bcm, far more than the 7.7%/year average increase achieved over the past decade. Growth was fueled by higher volumes sold to Asia and Europe. The increase of 22 bcm accounted for the total additional volume traded worldwide in 2005.

LNG activity is, indeed, booming, noted Cedigaz. Operators are building new infrastructure to meet anticipated demand growth. Nonetheless, there were contrasted trends according to regions. Start-up of the receiving terminals in Mexico, Guangdong-Dapeng in China, and Sagunto in Spain opened up new LNG routes.

In Europe and Asia, LNG imports rose substantially, posting respective growth of 20.4% and 10.4%, while LNG imports into US-Canada plunged by 7.3% to 16.6 bcm.

Consumption restraints

High gas prices boosted competition from coal and other energies and stimulated energy conservation and policies encouraging renewables. These, together with mild climate conditions, had a significant impact on the gas market in OECD countries, especially in Europe where apparent consumption rose by a slight 0.7% to 541.9 bcm.

In the US, gas consumption, according to data published by the US Energy Information Administration, declined 1.7% to 619 bcm (including stock changes). In Canada, for the third year running, local gas sales dropped—in 2006 by an estimated 1.7% from 2005. The US-Canada as a whole consumed 770.7 bcm.

Sustained economic growth and growing gas needs to cover demand from local markets (in particular power generation) explain the significant consumption increase outside most of the OECD region. In Latin America 127 bcm were consumed, in Africa 87.3 bcm, in the Middle East 280.6 bcm, and in Asia-Oceania, consumption rose to 426.7 bcm.

PIN/OGJ.COM