2 - NATURAL GAS INFORMATION: OVERVIEW (2018 edition)

The following analysis is an overview from the publication Natural Gas Information 2018.

Please note that we strongly advise users to read definitions, detailed methodology and country specific notes
which can be found online under at http://wds.iea.org/wds/pdf/gas_documentation.pdf.

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 NATURAL GAS INFORMATION: OVERVIEW (2018 edition) - 3

NATURAL GAS OVERVIEW

In the OECD, overall, natural gas production rose by
Production 2.3% (from 1 319 Bcm to 1 349 Bcm). This growth
occurred due to the sustained increase in Australia
In 20171, global natural gas production hit a new record (+18.4 Bcm; +21.1%) and Canada (+10.2 Bcm; +5.9%),
of 3 768 Billion cubic metres (Bcm). This is a 3.6% whereas on the other hand production in the
(+132.0 Bcm) increase compared to 2016 which consti- Netherlands (-6.8 Bcm) and Mexico (-5.1 Bcm) con-
tutes the largest increase since 2010. Natural gas produc- tinued to decline. The United States returned to
tion has been rising every year since the economic crisis growth (+5.2 Bcm) even though a small one.
of 2009 with a compound annual growth rate of 2.6%. Outside the OECD, the growth was mostly driven
Figure 1. World natural gas production by region by members of the Gas Exporting Countries Forum
Billion cubic metres
(GECF)2 whose production increased +5.6% (from
1 342 Bcm to 1 417 Bcm) compared to 2016. Over half
4000
3500
of that growth is attributed to the Russian Federation
3000 (+49.8 Bcm), which is followed by the scaling of pro-
2500 duction in Iran (+14.0 Bcm) and Egypt (+8.5 Bcm).
2000
1500 Figure 2. World natural gas production
by organisation
1000
500 Billion cubic metres
0 1600
1400
1200
Non-OECD Americas Africa
Asia (incl. China) Middle East 1000
Non-OECD Europe/Eurasia OECD 800
600
The additional 132.0 Bcm produced in 2017 was ap- 400
proximately proportionately split between the regions 200
although non-OECD Europe/Eurasia has the largest 0
rise due to a considerable increase of Russian produc-
tion (+49.8 Bcm; +7.7%).
The share of new producing countries outside OECD OECD GECF Rest of the World
and non-OECD Europe/Eurasia in the global produc-
tion has more than doubled since 1990, rising from In countries not members of the OECD or GECF pro-
16.8% to 39.8%. However, despite the continued in- duction increased by 2.7%, breaking the 1 Tcm limit
creased volumes the share for 2017 remained stable.

2. GECF member countries are: Algeria, Bolivia, Egypt, Equatorial

Guinea, Iran, Libya, Nigeria, Qatar, Russia, Trinidad and Tobago,
1. All energy data for 2017 are provisional. United Arab Emirates and Venezuela.

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4 - NATURAL GAS INFORMATION: OVERVIEW (2018 edition)
(1 003 Bcm) for the first time. Malaysia, the People’s
Republic of China, Saudi Arabia and Brazil experi-
enced the biggest increases. The share of global pro-
duction of these countries has grown from 19.8% in
1990 to 26.6% in 2017.
Figure 3. Natural gas production in the OECD
Billion cubic metres
1400
1200
1000
800
600
400
200
0
United States Canada Norway
Netherlands United Kingdom Australia
Rest of the OECD
Analysis of individual countries’ conditions shows a
range of factors implying production changes in 2017.
Within the OECD:
• Australia continued the fast growth shown also in
2016. Significant LNG export capacity has been
commissioned during the last 2 years and gas pro-
duction has increased (+18.4 Bcm) to support the
exports. In general, Australia’s production has
more than tripled since 2004, becoming the 8th
largest natural gas producer in the world for 2017,
climbing from the 10th position in 2016.
• The production in the United States returned to
growth (+5.2 Bcm) – even though a smaller one
compared to the first years of the shale revolution –
following the subtle uptick of the prices.
• Canada’s production observed a sustained growth
for 2017 (+10.2 Bcm) having the 2nd largest con-
tribution in OECD’s production increase.
• In Norway, the production increased 6.3% in 2017
creating a new all-time high.
• The UK production has remained relatively flat for
the past 2 years, with a minor increase in 2017
(0.4 Bcm).
• In the Netherlands, the tightening cap in gas
production established by the government at the
major Groningen gas field in response to the risk
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of earth quakes continued in 2017, resulting in an
accelerated decrease in their gas production
(-6.8 Bcm). The plan is to completely phase out
the field by 2030.
• The gas output in Mexico continued falling due to
the decline in associated gas from legacy oil and
gas fields (-5.1 Bcm).
Among non-OECD countries:
• Russia led the increase outside the OECD, reach-
ing 694 Bcm in 2017, which is 49.8 more than the
previous year. This increase constitutes 37.7% of
the global increase in production.
• In Iran production grew by +7.0% making 2017
the 21st year of consecutive growth. Since 2006,
production has grown with a compound annual
growth rate of 8.1% per year.
• China accelerated its production growth in 2017
increasing the output by about 4.8 Bcm, consoli-
dating its position as the 6th largest gas producer
globally.
• Qatar, the fifth largest producer of natural gas,
showed a relatively flat production with a slight
increase of 0.1% in 2017 (+0.2 Bcm).
• In 2017 all decreases in production were relatively
small and none of which exceeded 1 Bcm.
The top five natural gas-producing countries
(United States, Russia, Iran, Canada and Qatar) to-
gether represented 53.6% of the world’s production,
slightly increased from 2016 (53.2%).
Imports
Global gas trade approached 1.2 Tcm in 2017 experi-
encing an increase of around 100 Bcm, with LNG
gaining ground and accounting for 32.9% of global
trade compared to 31.7% last year. This LNG growth
is primarily attributed to the surge in LNG exports
from the United States and Australia, which both had
new LNG export capacity coming online in 2017 and
late 2016. As a result new LNG routes appeared
globally in 2017 with the aforementioned countries
increasing their share in multiple LNG importing
countries and reaching new destinations.
Pipeline imports
Imports by pipeline to OECD Europe rose by
46.1 Bcm in 2017, consolidating the region’s position
as the world’s largest importer. OECD Europe
 NATURAL GAS INFORMATION: OVERVIEW (2018 edition) - 5

represented 58.1% of the pipeline trade in the World. Figure 4. Change in natural gas imports by pipeline,
This growth was mostly due to increases in imports in 2016-2017p
Germany (+22.7%) which is the largest consumer in Billion cubic metres

the area, the Netherlands (+18.1%) mainly due to the -10 -5 0 5 10 15 20 25 30 35 40 45 50

decrease in production, and Turkey (+14.5%) to meet OECD Americas
the increasing demand. With the growth in consump- OECD Asia Oceania
tion but production in most European countries de-
OECD Europe
clining or remaining stable, the region became more
Africa
dependent on imports from countries outside the
OECD with the imports from the Russian Federation Non-OECD Asia (excl. China)

exceeding 1/3 of the total. China

Middle East
OECD Americas also increased their pipeline imports
for the third year in a row although at a slower pace Non-OECD Americas

(+5.3 Bcm). This increase was due to the pipeline
trade between the United States (+1.25 Bcm) and
Canada (+4.0 Bcm) with the flows depending on the
regional surpluses and deficits of the two countries.
Compared to the situation in OECD Europe, the in-
crease in pipeline trade in OECD Americas is purely
between members of the OECD.
Outside the OECD there are different trends across the
regions with most of the regions remaining generally
Non-OECD Europe and Eurasia
stable. Of note was the growth of Non-OECD Europe
and Eurasia imports (+6.3 Bcm, with Ukraine account-
ing for over 1/3 of it) after last year’s decrease, and sec-
ondly the continued decrease in Middle East (-3.8 Bcm,
with Iran accounting for 75% of it) due to the increased
local production. China’s pipeline imports stopped

Figure 5. Map of LNG movements in the OECD*

Billion cubic metres

* The trade volumes smaller than 400 mcm are not represented in this map.
Note: This map is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the
name of any territory, city or area.

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6 - NATURAL GAS INFORMATION: OVERVIEW (2018 edition)

increasing at the previous pace (+0.6 Bcm) with a shift relative decrease (-67.2%) was noticeable, even
to LNG being observed. Finally, the decrease in Brazil though the volumes involved are quite small
(-12.0%) drove the decline in non-OECD Americas (-0.9 Bcm).
region.
Figure 6. Change in LNG imports,
2016 – 2017p
LNG imports Billion cubic metres
-5 0 5 10 15 20
Within the OECD, there was a substantial increase
OECD Americas
(+20.0 Bcm) of LNG imports in 2017. The OECD
Americas observed an increase (+7.0 Bcm) which OECD Asia Oceania

was almost exclusively due to Mexican imports OECD Europe

(+7.3 Bcm) which were generally from the Africa
United States. Non-OECD Asia (excl. China)

Similarly, increases were observed in OECD Europe China

(+9.6 Bcm) – where growth in Turkey (which ac- Middle East
quired new LNG importing facilities), Spain, France
Non-OECD Americas
and Portugal more than offset the decrease in the UK
Non-OECD Europe and Eurasia
(-3.1 Bcm). In OECD Asia Oceania (+3.4 Bcm), the
growth was driven by Korea (+4.5 Bcm) whereas
Japan experienced a decrease (-1.2 Bcm). Australia
increased its LNG exports to the two countries above
(+9.0 Bcm), consolidating that way its position as the Demand
largest source for the region.
In 2017, global demand for natural gas increased by
Qatar remains the major LNG exporter for OECD
3.2% compared to 2016, rising up to 3 757 Billion
despite its total share’s decrease (21.4%) in 2017,
cubic metres and continuing the years of consecutive
with Australia coming second in total share (18.8%).
increase since 2009.
In 2017, non-OECD countries continued importing
In 2017, OECD natural gas demand was 1.7% higher
more LNG than previous years and they accounted for
than in the previous year. In OECD Europe, where con-
38.1% of the global LNG imports, which indicates a
sumption rose by +4.6%, the increase was concentrated
steep increase since 2006, when OECD countries rep-
in the largest consumers of the region: Germany
resented 90.3% of the total market. This year’s growth
(+5.4 Bcm), Italy (+4.2 Bcm) and Turkey (+7.2 Bcm),
was mainly pushed by China which had the largest
with the latter mostly going to power generation. In
absolute increase (+18.5 Bcm, +59.6% compared to
general, apart from the gas-fired power generation, an
2016) and became the second largest LNG importer
amount was directed to residential consumption due to
globally behind Japan, with Korea third.
spells of cold weather at the end of the year. Finally,
Additionally, 2017 was also a year of increase for the the decrease continued for the UK where the coal-to-
rest of Non-OECD Asia with Chinese Taipei gas generation switch persisted, but at a slower pace.
(+2.0 Bcm), Thailand (+1.4 Bcm) and Pakistan, which
An increase was also registered in OECD Americas,
started to import LNG in recent years driving the in-
0.7% in the entire region, mainly driven by the growth
crease. In the same region, India’s increase decelerat-
in Canada (+ 14.5 Bcm), which more than offset the
ed to +3.0% after years of increase.
decrease in the United States (- 9.5 Bcm) that reverted
LNG imports also decreased in Africa (-3.3 Bcm) the changes occurring in 2016. In OECD Asia Oceania
mainly driven by Egypt (-3.3 Bcm) whose imports natural gas demand was consolidated at the same levels
needs shrank due to its increase of domestic produc- with a decrease of (-0.7 Bcm) after last year’s increase.
tion. The other regions remained relatively stable with Within the region, Japan and Korea experienced small
the same pattern applying to the countries constituting decreases (-1.0 Bcm and -1.7 Bcm respectively), which
them. The sole minor exception is Lithuania whose were partially offset by Australia (+2.0 Bcm).

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Figure 7. World natural gas demand by region
Billion cubic metres
4000
3500
3000
2500
2000
1500
1000
500
0
Non-OECD Americas Africa
Asia (incl. China) Middle East
Non-OECD Europe/Eurasia OECD
In non-OECD countries, natural gas demand increased
at faster pace (+4.5%). Non-OECD countries have been
consuming more than the OECD since 2008, and there-
fore the gap widened between the two groups with
countries members of the OECD now accounting for
46.3% of global demand.
Different trends have characterized the demand growth
since 1990 across regions:
• In OECD Americas consumption grew steadily be-
tween 1990 and 2000 when it stabilized around
800 Bcm for 10 years. In 2010 demand growth re-
sumed until 2017, when it hit the record of 978 Bcm.
• In OECD Europe, a steady increase was sustained
until the year 2005, when it stabilized between
540 Bcm and 560 Bcm until 2008. It peaked in
2010 (573 Bcm), in the post-crisis rebound and
fell reaching 460 Bcm in 2014. Despite growth in
the last four years, it is still far from the levels pre-
vious to the economic crisis in 2009. In addition to
economic drivers, improvements in energy effi-
ciency in major gas consuming sectors, such as
space heating also contributed to slower demand
growth.
• In OECD Asia/Oceania, demand also increased
steadily until 2007 when it remained almost con-
stant for three years before growing again in 2010
(driven by demand growth in Korea) and 2011
(driven by the decrease in nuclear power genera-
tion after the Fukushima accident in Japan). Since
then, it oscillated around 230 Bcm.
• In non-OECD Europe/Eurasia, natural gas con-
sumption was gradually decreasing during the
1990s. Moreover, for the past 20 years demand has
NATURAL GAS INFORMATION: OVERVIEW (2018 edition) - 7
been moving in the range of 600 to 700 Bcm,
peaking in 2011 (700 Bcm).
• Finally, in the rest of the World, natural gas con-
sumption showed a strong compound average growth
rate of 6.3% per year in since 1990. This trend has
been even stronger in China, where the average in-
crease rate was of 13.1% per year for the past
20 years.
Figure 8. World natural gas demand
by selected regions
Billion cubic metres
1600
1400
1200
1000
800
600
400
200
0
OECD Americas OECD Asia Oceania
OECD Europe Non-OECD Europe/Eurasia
Rest of the World
At a country level, significant increases in natural gas
demand were registered in 2017 for the People’s
Republic of China (+14.0% reaching close to 232 Bcm),
Russia (+6.5%; +28.9 Bcm), Iran (+6.3%; +12.4 Bcm)
and Egypt (+14.8%; +7.1 Bcm). On the other hand, there
were not many countries with significant decrease with
the most noteworthy the one in Nigeria (-5.1 Bcm), fol-
lowed by Turkmenistan (-1.8 Bcm), Ukraine (-1.2 Bcm)
and Colombia (-1.0 Bcm).
Detailed demand data by sector, available to 2016, show
non-OECD demand increasing, mainly in the largest
natural gas-consuming sector, the heat and power gener-
ation (+0.8%, equivalent to +6.5 Bcm). This was the
case in United Arab Emirates (+7.0 Bcm), the
People’s Republic of China (+5.2 Bcm), Iran (+3.4 Bcm)
and Saudi Arabia (+3.4 Bcm). This growth offset the
decrease in the Russian Federation (-11.5 Bcm) driven
by the shorter heating season in 2016 and Brazil
(-5.6 Bcm) which decreased gas-fired generation after
the 2015 drought. Apart from the increased electrifi-
cation, natural gas is becoming more relevant in the
heat and power generation sector where it is replacing
coal and oil.
In the OECD, natural gas demand for power
generation increased more significantly than in
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8 - NATURAL GAS INFORMATION: OVERVIEW (2018 edition)
Figure 9. Natural gas use
for power generation
Billion cubic metres
900
800
700
600
500
400
300
200
100
0
OECD Non-OECD
non-OECD countries in 2016 (+5.8%). Mainly pushed
by low prices, that assisted the switching to gas-fired
generation. The main sources of increase were the
United Kingdom (+7.8 Bcm), the United States (+6.4 Bcm)
and Japan (+4.8 Bcm), which grew in 2016 after a fall
observed in 2015.
Other major natural gas consuming sectors showed
diverging trends globally in 2016, although none of
the aggregate sectors decreased consumption.
In 2016 the industry sector showed an increase in natu-
ral gas consumption in both OECD and non-OECD
countries, which was mainly driven by the chemical
and petrochemical sector, more strongly for OECD
though. In the residential and commercial sectors trends
were disparate, with non-OECD countries encountering
a +6.3% increase, whereas the consumption in OECD
countries stayed flat. Consumption in the oil and gas
extraction increased globally with non-OECD countries
enjoying a stronger increase. The increase in consump-
tion for machinery is driven almost exclusively by
China, whereas the decrease in non-metallic minerals
by Russia. Finally regarding road transport, China
represents the 40.5% of global consumption.
The trends also differ among OECD regions. Whereas
in OECD America the consumption in the residential
sector decreased, it increased in OECD Europe con-
tinuing this divergent behaviour between the two re-
gions for another year.
The chemical and petrochemical sector saw an overall
increase in natural gas consumption (+9.2 Bcm) with
the United States mostly accounting for it by consum-
ing +5.4 Bcm for energy use and +3.9 Bcm for non-
energy use. Regarding other notable changes in 2016,
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Figure 10. Change in natural gas demand in selected
sectors, ranked by magnitude, 2015-2016
Billion cubic metres
Residential
Chemical and petrochemical
Oil and natural gas extraction
Pipeline transport
Commercial & Public Services
Machinery
Non-metallic
Oil refineries
Iron and steel
Road
Non-ferrous metals
-5.0 0.0 5.0 10.0 15.0
OECD Non-OECD
considerable increase in the consumption of gas for
non-energy uses took place also in Malaysia
(+1.9 Bcm), Iran (+1.0 Bcm), Egypt (+0.9 Bcm) and
Russia (+0.8 Bcm). In general, the share of non-energy
use of gas in industry has been growing globally for the
past two decades reaching from 19.2% of the total in-
dustry consumption in 1996 to 23.9% in 2016.
Prices
In 2017, natural gas import prices by pipeline for
European Union members rose for the first time since
2012 by 19.3%, while in the United States they rose by
16.8%, for the first time since 2014. The gap between
these two prices grew wider in 2017, reversing the
convergence present in the previous year. As a result,
the price for the American market remained consider-
ably lower (-57.5%) than the European one, at
2.50 US dollars/MBtu vs. 5.88 US dollars/MBtu.
LNG import prices showed a similar pattern, with an
increase observed in European Union members
(+14.0%) and United States (+12.5%), whereas for
Japan and Korea almost remained unchanged
(+0.2%). After converging in 2014, LNG prices in
Europe and the US remained in line in 2017 again
whilst in Japan and Korea the gap between their LNG
import prices and those for the US and Europe contin-
ued to narrow. This convergence is partially driven by
the increase in global liquefaction capacity, and espe-
cially in Australia.
The LNG price for the American market remained be-
low that of the European one, but much higher than the
 NATURAL GAS INFORMATION: OVERVIEW (2018 edition) - 9

Figure 11. Natural gas import prices by pipeline Figure 12. LNG import prices
US dollars/million British thermal units US dollars/million British thermal units
12.00 18
16
10.00
14
8.00 12
10
6.00
8
4.00 6
4
2.00
2
0.00 0

Japan and Korea

European Union Member States United States European Union Member States
United States

pipeline import price, at 4.49 US dollars/MBtu. The
price in Europe was of 5.45 US dollars/MBtu, slightly
lower than the price of pipeline imports, indicating the
competitiveness of LNG as a source of imports for
Europe. In Japan and Korea, the two largest LNG im-
porters, the weighted average price was higher,
7.05 US dollars/MBtu.
The LNG market continued its globalization in 2017,
with 18 countries with liquefaction capacity operating
and 41 countries with regasification capacity. In 2017
Russia commissioned its first LNG liquefaction ter-
minal in the Atlantic basin and Malta its first LNG re-
gasification one.
The spread between LNG import prices in the
United States and Japan & Korea was
2.56 US dollars/MBtu in 2017, -68% down from the
7.91 US dollars/MBtu observed in 2014. This gradual
convergence is aligned with the expansion of LNG
capacity worldwide which is creating a global market
and prices for LNG trade.

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