The worldwide gas industry
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Introduction
Introduction
The markets remained steady in terms of both quantity and price until September. This changed as the economic crisis worsened during the last quarter of the year.
As far as demand for natural gas is concerned, 2008 can be divided into two very different periods throughout almost the entire world. The first, which ended in August, saw relatively strong demand in much of the world (+4.3% in the combined OECD countries during the first 8 months of the year; +8.2% in Europe, +5.2% in OECD-Pacific countries; and +3.1% in the USA), boosted by weather conditions that were relatively harsher than they had been for the same period in 2007 in the northern hemisphere. The second involved a fourth quarter in which the economic crisis began seriously to affect demand, particularly in the industrial sector. In the group of OECD countries, consumption of natural gas during November fell by 4.3%, bringing the accumulated annual rise down to a modest 1.8%.
In general, the way that prices behaved during the course of the year clearly mirrored the price curve for oil-based products. This meant high prices and volatility, a distinctive feature of the first months of 2008. The International Energy Agency (IEA) reported that “A number of factors, including higher oil prices, weather conditions and supply and demand imbalance, all played a role during the price increases in the last 18 months”.
During the last months of the year, the situation changed and the markets were less dominated by supply. The change in market behaviour due to weaker demand during the course of these months led to a substantial fall in prices, with the Henry Hub indicator in December at around $6.5 / MMbtu, approximately half the price recorded around the middle of the year.
The IEA’s announcements included references to the dangers affecting the gas sector in certain parts of the world: uncertainty of investment, increased costs and delays to some projects. These problems had already been observed in 2007.
In general, the way that prices behaved during the course of the year clearly mirrored the price curve for oil-based products. This meant high prices and volatility, a distinctive feature of the first months of 2008. The International Energy Agency (IEA) reported that “A number of factors, including higher oil prices, weather conditions and supply and demand imbalance, all played a role during the price increases in the last 18 months”.
During the last months of the year, the situation changed and the markets were less dominated by supply. The change in market behaviour due to weaker demand during the course of these months led to a substantial fall in prices, with the Henry Hub indicator in December at around $6.5 / MMbtu, approximately half the price recorded around the middle of the year.
The IEA’s announcements included references to the dangers affecting the gas sector in certain parts of the world: uncertainty of investment, increased costs and delays to some projects. These problems had already been observed in 2007.
The crisis that emerged between Ukraine and Russia in January 2009 over issues of payment and the transporting of Russian gas forced Europe into the realisation that it needed to diversify its supply in terms of both origin and route.
In this quest for diversification, both the southwest corridor (the Iberian Peninsular) and LNG play an important role. Throughout the world, some two dozen countries have plans to become importers of LNG for the first time in their history. In addition, the countries of southern Europe are seeking to play a leading role as transit countries.
Annual Report 2.008: Sedigas - The Spanish Gas Association