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CBI NI energy conference: Alex Ferguson
1. Energy market outlook 2012
Alex Fergusson | Senior Policy Adviser | Energy
February 29 2012
2. The UK is increasingly dependent on
imported gas
Source: DECC Digest of United Kingdom energy statistics 2011 2
3. Gas markets: the global context
A supply side glut?
Conventional gas supplies seem assured, but is
Russia looking to sell eastward?
Unconventional gas: a global supply glut?
Shale LNG
3
4. Gas markets: the global context
Demand side pressures?
Source: International Energy Agency: World Economic Outlook 2011 4
5. Gas markets: the global context
Demand side pressures?
Impact of Fukushima European demand
limits
Germany: extra China and the Eurozone crisis
16bcm by 2020 environment
Oil indexation
Italy, Switzerland Economic growth and leading to decreased
increased demand competitiveness
Japan: what future
for nuclear? Environmental impact Push on renewables
of coal
Demand increase to
500 bcm by 2035
5
6. Gas markets: the global context
Demand side pressures? Germany
6
Source: International Energy Agency: World Economic Outlook 2011
7. Gas market outlook
Price prospects
Past: Russia all important
Future: what happens to US production and Asian demand at least as
important.
Source: Financial Times: Commodities Index February 20 2012 7
8. Oil markets: the global context
Global reserves: 50 to 55 years at current consumption
Supply side ‘events’ Demand side easing?
Iran and the EU embargo OPEC subsidies
The Arab Spring China and India demand growth
Iraq: the supply side wildcard? Eurozone demand fragility
Energy efficiency: the demand
side wildcard?
8
9. Oil market outlook
Current prices
25% below 2008 peak
Stock levels below long run average for fifth consecutive month
pointing to upside price risk
Source: CBI analysis 9
12. Electricity market outlook
Policy costs: Electricity Market Reform
Carbon costs: ITRE vote on ETS set aside
Carbon floor price in NI?
Energy efficiency? Green Investment
Bank
12
Hinweis der Redaktion
ChinaJapanGermanyEuropeAustralian LNG
Arab SpringStraits of HormuzEurope
Oil prices have cooled a little since April 2011, but the downward trend has been sluggish and volatile. In January, the Brent price averaged €110, from €124 in April. However, that is only as low as they were in February 2011, and there was been a renewed spike in prices in recent weeks.They are now around 25% below the July 2008 peak.The International Energy Agency’s latest Oil Market Report says that global oil supply has faced some challenging “events” in the New Year, not least the EU ban on Iranian oil imports. However, OPEC raised supply targets a little in December. Stock levels were below the long-run average in November for the fifth-consecutive month, presenting a further upside risk to prices.On the demand side, the IEA reports that a softening in the wake of a general economic slowdown and, in particular, concerns about the Eurozone. This offset upward pressures on prices from supply side factors.
2012 a key yearFuel costsCarbon costsPolicy costsEMR Carbon price floorEffect on SEMEPS Capacity mechanismFeed in tariffs with Contracts for DifferenceEIIs package – some alleviation. Prices on billsEnergy efficiency to override price rises? Carbon price – ITRE vote on ETS vote yesterday