its about environment and pollution

1. Gas - The Future or a Transition Fuel Only
29 November 2017
Natural Gas: Fuel indeed or Fuel in need?
8th Bosphorus Summit,
Istanbul, Turkey
29th November , 2017

2. Gas - The Future or a Transition Fuel Only
29 November 2017
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 GECF Views on Natural Gas Markets
 Key Challenges for Natural Gas
 Credentials of Natural Gas vis-a-vis SDGs
 Position of GECF towards Natural Gas Role
Contents

3. Gas - The Future or a Transition Fuel Only
29 November 2017
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Natural Gas Consumption will continue to grow
Will it grow enough to absorb the growing supply?
 World natural gas consumption growth: ~1.8% in 2016 to reach 3.54 Tcm  ~63 Bcm more compared to 2015.
 driven by Europe (U.K., France, Germany, Italy and The Netherlands), Asia (China and India) and the Middle East region.
 Expected growth in 2017: ~ 2% primarily driven by Europe and Asia.
 Expected growth in 2018: ~ between 2.1% and 2.2%.
 Why?:
 Weather conditions, economic expansion mainly in Asia (China, India), competitive prices and environmental concerns
0
500
1000
1500
2000
2500
3000
3500
4000
Natural Gas Consumption by Region
(Bcm)
North America S. & Cent. America Europe & Eurasia
Middle East Africa Asia Pacific
Source: BP Statistical Review, Cedigaz (*) GECF assessment
North
America
27%
S. & Cent.
America
5%
Europe &
Eurasia
29%
Middle
East
15%
Africa
4%
Asia
Pacific
20%
2016: Natural Gas Consumption by Region
(%)

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Natural Gas Production: Conventional & Unconventional
Growth driven by unconventional Gas
4
Data: Rystad Energy Dec 2016 & BP June 2017, Reuters. , China’s Ministry of Land and Resources
 Global natural gas production continue to grow y-o-y reaching ~ 3.6 Tcm in 2016: Unconventional gas production (shale oil and gas
output in the US as oil prices pick up).
 China continue to ramp up unconventional gas production to ~7.9 Bcm in 2016 missing the target. PetroChina and Sinopec
planned to rise output from the Sichuan basin in 2017.
 Conventional gas remains the dominant source of gas production (~2.8 Tcm in 2016) majorly from GECF Member countries.
 More gas production expected in the future (power generation, new LNG projects and environmental concerns) with global gas
production expected to top 3.7 Tcm towards 2018/2019.
45.9%
45.3% 45.3%
45.5%
44.2%
43.6%
43.7%
42.0%
42.5%
43.0%
43.5%
44.0%
44.5%
45.0%
45.5%
46.0%
46.5%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2010 2011 2012 2013 2014 2015 2016
Bcm
GECF and Non-GECF Natural Gas Production
GECF (Members + Observers) NON-GECF GECF Share (%)

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29 November 2017
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Trend in Global LNG Trade
Significant Growth Triggered by New LNG Production
-
50
100
150
200
250
300
2012 2013 2014 2015 2016
Million
tons
Asia Europe Latin America Middle East U.S. /Canada
1.2% 2.4% 1.5% 6 %
Global LNG Trade grew by 6% to reach around 263 million tons in 2016.
Asia accounted for 72% of the total LNG trade followed by Europe with
15%, Middle East with 6% and Americas 6%
LNG Trade by Region
2012 -2016
GECF exported ~60% of the Global LNG
supplied in 2016
LNG Trade 2016: 263 mtpa
Source: ICIS LNG EDGE
▲ UP: Asia 189 MT (7%) & Middle East 17 (71%)
▲▼ EQUAL: Europe 41 MT or 0.6% increase
▼DOWN: Latin America 14 MT (-22.1%) & U.S./Canada 2 MT
(-15.7%)
-
50
100
150
200
Asia Europe Latin
America
Middle East U.S. /
Canada
GECF Non-GECF
Regional LNG imports supplied by GECF:
• Asia – 46%
• Europe – 98%
• Latin America – 78%
• Middle East – 84%
• US/Canada – 100%

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0
50
100
150
200
250
300
Jan-Oct 2016 Jan-Oct 2017
Asia Europe
Data Source: ICIS LNG EDGE. GECF calculations.
Global LNG Trade in 2017
New Records
Global LNG trade grew by 11% Y-o-Y (to Oct 2017), compared to the same period in 2016,
standing at about 193 Mt, driven by Asian and European markets.
 Asia LNG imports jumped by +13% to average 171.80 MT (safety, environmental
concerns, competitive import price & supportive energy policies in China & South
Korea).
 European LNG imports soared to reach almost 39Mt, 15% higher than the same
period in 2016. (cold weather, nuclear outages and high coal prices).
Global LNG Trade (mtpa)
LNG Trade by Region (mtpa)
and variation (%) y-o-y
11%
-
5
10
15
20
25
30
Asia Europe Middle East Latin America U.S./ Canada
(*) Preliminary Figures
Data Source: ICIS LNG EDGE
171.80
38.76
13.70 12.98
1.48
0
20
40
60
80
100
120
140
160
180
200
Asia Europe Middle East Latin America U.S./ Canada
Jan-Oct 2016 Jan-Oct 2017
Data Source: ICIS LNG EDGE. GECF calculations.

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29 November 2017
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LNG Capacity
Projects Delays and Slower Pace of FIDs
8.15
23.30
9.65
16.95
3.8
14.25
21.92
23.88 1.5
5.50
5.50
5.50
2.40
0
10
20
30
40
50
60
2017 2018 2019 2020
Australia Indonesia U.S. Malaysia Russia Cameroon
1. Commissioning of new LNG trains: Australia, US, Russia & Malaysia & restart of Angola LNG.
2. Delay of two new projects from Australia.
About 30 MT of incremental LNG capacity expected in 2017 Global installed LNG capacity to reach ~ 384 MT
3. FID: No FID so far in 2017, except Mozambique’s 3.3 MTPA Coral F-LNG while E. Guinea’s2.2 MTPA Fortuna FLNG to take FID by end 2017
Projects cancelled: Canada - North West Pacific LNG (Petronas) and Aurora LNG
Global LNG capacity to reach 466 MTPA by 2020
4. Post 2020:
• Many GECF MCs are expected to bring additional LNG volumes via new projects, expansions, debottlenecking such as Qatar’s plans to raise its
LNG production to 100 MTPA after shifting the moratorium on North Field
New LNG capacity expected by 2017-2020
( MTPA)
Source: IGU, Petroleum Economist and updated information for these projects
0
50
100
150
200
250
300
350
400
450
500
Cameroon
Angola
Yemen
PNG
Bunei
Malaysia
Indonesia
U.S.
Australia
Norway
Peru
Global LNG capacity 1964-2020
( MTPA)

8. Gas - The Future or a Transition Fuel Only
29 November 2017
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Cross Basins Arbitrage Opportunities and Gas Prices
A price Convergence/ Divergence Arbitrage Opportunities?
8
In the middle of November 2017, the cross-basin differential was $1.02/MMBtu, lower than the required minimum cross-
basin shipping cost of $1.40/MMBtu for arbitrage opportunity
 2017 YTD-Nov. 17, 17 Spot Price Analysis (y-o-y):
 HH - $3.00/MMBtu (+ 24.8%)
 NBP - $5.56/MMBtu (+23.6%)
 SWE LNG - $6.17/MMBtu (+30.4%)
 NEA LNG - $6.82/MMBtu (+24.4%)
Source: Argus ,Reuters, GECF Estimate, OANDA
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
$/MMBtu
HH NEA SWE NBP
Cross-basin Shipping Cost= 1.40 $/MMBtu> Cross-basin Differential
No Arbitrage Opportunity

9. Gas - The Future or a Transition Fuel Only
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Long-term drivers of the world energy demand
The World in Increasing Need of Energy
Historical Forecast
2000 2016
Change
2000-2016
2020 2025 2030 2035 2040
Change 2017-
2040
Real GDP growth, % 3.6 3.6 - 3.6 3.8 3.5 3.2 3.1 3.4
GDP PPP per capita,
2016 USD
11059 16059 2.5 17752 20368 23115 25975 29235 2.5
Population, mn 6104.6 7410.4 1.2 7737.1 8122.1 8482.8 8822.7 9142.9 0.9
Urbanization rate, % 46.7 54.4 7.6 56.0 57.9 59.6 61.1 62.5 8.2
Car fleet, mn 750.0 1302.2 3.5 1451.3 1629.5 1800.5 1949.3 2074.1 2.0
Number of
households, mn
1571.4 2060.4 1.7 2185.3 2346.9 2513.2 2682.0 2850.6 1.4
0
30
60
90
120
150
2015 2020 2025 2030 2035 2040
Gasoline Cars Diesel Cars LPG Cars CNG Cars
Hydrogen Cars Hybrid EV (B, PH) EV
Vehicle sales, mn
0
100
200
300
400
500
600
World OECD Non-OECD
2016 2040
Passenger cars and LCV
per ‘000 population

10. Gas - The Future or a Transition Fuel Only
29 November 2017
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Global Primary Energy demand rises 29% between 2017 and 2040
Dominance of Fossil Fuels
• Global energy demand is projected to grow by 1.1% per annum, from 13.8 to almost 17.8 Gtoe
• Main drivers:
 Increasing global population
 Economy prosperity, primarily attributed to emerging economies
 Higher living standards
• Natural gas will be the fastest growing fossil fuel, increasing by 1.8% per annum to 2040
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
Natural
gas
demand
growth
(%)
Mtoe
Natural Gas Oil Coal Nuclear Hydro Renewables Natural gas demand growth (%)

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Global Natural Gas Consumption increases by 53% between 2017 & 2040
11
0
1000
2000
3000
4000
5000
6000
2000 2005 2010 2016 2020 2025 2030 2035 2040
bcm
Non-OECD Asia North America Middle East
CIS OECD Europe Latin America
OECD Asia-Pacific Africa Non-OECD Europe
0
1000
2000
3000
4000
5000
6000
2000 2010 2016 2020 2030 2040
Domestic Sectors Industry Feedstocks
Transport Power Generation Heat Generation
Hydrogen Generation Refinery Other Uses
• Non-OECD Asia, the Middle East and Africa will lead consumption trends.
• Power generation will remain the largest natural gas sector, with 2329 bcm in 2040 and 43% of the market.
• In the long-term, the transport sector will grow faster than the power sector: 3.9% per annum, compared to
2.5% in the power sector.
• Industrial sector will drive gas demand, replacing oil as a raw material for petrochemical sector.

12. Gas - The Future or a Transition Fuel Only
29 November 2017
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0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
Natural Gas Oil Coal
Nuclear Hydro Renewables
• Global electricity is projected to grow to 41235 TWh by 2040; demand for electricity is expected
to grow at an annual rate of 2.2% between 2017 and 2040
• The share of gas in the power generation sector increased from 18% in 2000 to 23% in 2016
 It will continue to rise to 28% in 2040: This represents the largest market share of any fuel
• In 2016, the share of renewables in the global electricity mix was only 8%
 Renewables will be the fastest growing fuels for electricity generation in 2040, with a
share of 20%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
0
5000
10000
15000
20000
25000
30000
35000
40000
45000 2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
Electricity
demand
growth
(%)
TWh
Electricity demand (TWh) Electricity demand growth (%)
Global Share of Fuels in Electricity Generation

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Gas Market Analysis Department
United States:
- New US Administration
- Higher coal consumption in
power sector
- US as a key fossil energy
exporting area?
Europe:
- EU Energy Policies
- New French Administration
- BREXIT
- Reduction of production from Groningen Field
-Closure of Rough Storage in UK
-German Elections
-Italy to phase out coal power plants by 2025
China: New policy to increase
natural gas share from 6% to
10% by 2020 and 15% by 2030
South Korea: New policy to increase
natural gas share from 18% to 27% in
2030
Major Policies Developments impacting Natural Gas Markets
Japan:
- Liberilization of Electricity and retail gas
market
- JFTC ruling on destination and profit
sharing clauses for new contracts
- Two nulcear reactors with a capacity of
1.66 GW restarted in 2017 with more
expected to be restarted in the future
India:
- Policy for reforming energy markets,
cutting subsidies and enhancing the
role of natural gas
- New emission standards targeting
coal power
Brazil: new natural gas
regulations to be sent to
Congress by end-2017

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29 November 2017
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Market Price Trends (energy equivalent basis)
-2
8
18
PRICE
($/MMBTU)
WTI Crude vs HH Gas vs Cent. Appalachian
Coal ($/MMBtu)
WTI Crude Oil Henry Hub Natural Gas Cent. Appalachian Coal
0
10
20
PRICE
($/MMBTU)
Brent Crude vs NBP Gas vs NWE Coal
($/MMBtu)
Brent Crude Oil NBP Natural Gas N.WE Coal
0
5
10
15
20
PRICE
($/MMBTU)
JCC Japan LNG Japan Steam Coal
JCC Crude Vs Japan LNG Vs Japan Steam Coal Prices
($/MMBtu)
Based on energy equivalent basis, gas prices fails to reflect the premium it deserves over coal and oil.
In sectorial usage, the premium should include:
- Environmental credential of natural gas over oil and coal;
- Efficiency
- Safety
- Security of Supply
- Availability (Baseload)

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Natural Gas, as the Cleanest Fossil Fuel, has to play a key role
in GHGs Mitigation Efforts
•Good complementarity between gas and renewables;
• Good energy performance of gas-based technologies and processes;
• Gas is clean, abundant, affordable and allows improvement of energy accessibility.
Gas enjoys many advantages
making it compatible with
sustainable development
CO2 emission by unit of energy consumed
(T.CO2/Toe)
- 1.00 2.00 3.00 4.00 5.00
Natural
Gas
Oil
Coal Gas emits less CO2
than other fossil
fuels, and also less
harmful (Particles,
NOx, SO2…);

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29 November 2017
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GECF & Climate Change Issues
MM
Vision & Mission
Strategic Objectives
Cooperation
Notably, Article 3
Natural Gas: Green,
Abundant & Safe
Unclear and Unconsistent
Energy Policies, Technology
Advancement, Regulations,
increasing Competition,
Uncertainties.
Promotion of Natural Gas
Resolutions & Approval
of Studies of the Forum

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GECF’s Main Message to COP 21
GECF recognizes the importance of
challenges posed by Climate Change &
Global Warming
Treat environmental concern in a responsible manner through pragmatism and
global policy coordination.
Natural gas as the cleanest of all known
fossil fuels is in a unique position to provide
the lion share of global energy needs in the
coming decades
Natural gas is capable of easing the world’s transition into the age of renewable
energies as the relevant substitute for pollutant fuels, such as coal, currently in
widespread use.
As fuel of choice in the global energy mix that could contribute to achieving the
goals of sustainable development framework.
The Declaration of the 3rd GECF Summit
also underlines the role of natural gas
GECF member states are currently in
possession of major global gas reserves &
are in a unique position to supply clean &
safe energy in sufficient volumes to meet
the ever growing global energy
requirements
However, development of natural gas cannot be guaranteed without adequate
and secure investment, especially in the upstream sector.
Security of supply cannot be realized in a volatile environment shrouded with
uncertainty;
Long-term agreements and reasonable prices play key roles in maintaining
security of supply essential for both producers and consumers of natural gas.
To that end, collective efforts are required to adopt proper policies and
instruments to expedite the promotion of natural gas against pollutant fuels.

18. Gas - The Future or a Transition Fuel Only
29 November 2017
1st Summit-Doha Declaration: Natural Gas: The answer to the
21st century’s sustainable development challenge: Green fuel,
Abundant resource, Safe alternative
2nd Summit-Moscow Declaration: Natural Gas: The answer to the
21 century’s sustainable development challenges
3rd Summit-Tehran Declaration: Natural Gas: Fuel of choice for
sustainable development
4th Summit: Santa Cruz de la Sierra Declaration: Natural Gas:
Clean and Reliable Resource for Global Sustainable Development
From the Summits Declarations of GECF Heads of State

19. Gas - The Future or a Transition Fuel Only
29 November 2017
Thank You
for Your Attention