Luis Bertrán Rafecas

Secretary General

Frankfurt, Germany

14th February 2017

CWC Frankfurt SummitOverview on the global challenges and opportunities

IGU Membership

www.igu.org

90 Charter members

10 Premium Associate members

51 Associate members

* Status as of October 2016

IGU membersFounded in 1931

AREAS OF STRATEGIC IMPORTANCE

SOCIAL

LICENSE

ACCESS

MARKETS

Growth in population and GDP

We need more energy

1 Source: Shell scenarios to 2050

2 Source: Shell better life with healthy planete

Growth in population and GDP

We need more energy

1 Source: Shell scenarios to 2050

2 Source: Shell better life with healthy planete

Pick of emission between 2020-2030 ….whether we act…

Gas enables the energy transition

Climate policies directly affect fossil fuel markets

• Carbon emissions policies signal reduced use of fossil fuels

• Myriad combinations of coal, oil and gas possible under INDC’s

• Regional energy mix driven by demand profile, relative energy costs and

policy priorities

• Other factors--air quality standards, technological change (renewables,

efficiency, storage), carbon pricing schemes

• Priority for rapid deployment of renewable energies

Most scenarios project natural gas growth

Climate policies directly affect fossil fuel markets (2)

Europe recovering its demand…

10

Gas demand in Europe seems to slightly recover (a change of trend?)

Source: Honoré/OIES using data from IEA, Natural Gas Information (various issues); “The future of gas in decarbonising European Energy Markets: the need for

a new approach”, Jonathan Stern, OIES.

Coal faces obstacles… but has cost advantage

• Greenhouse gas and air quality regulations

• Citizen opposition to siting and construction

• Increased availability, liquidity and flexibility

of natural gas

• Competition from renewables

• Hesitancy by banks and investors to finance

coal projects

• Carbon pricing schemes reflecting the

externalities of carbon and health care costs

Coal offers lowest marginal electricity generating cost

Coal to Gas switch: fastest way to reduce CO2

and smog in cities

12Source: Lambert Energy Advisroy Group (based on BP and IEA Stats)

Realizing the “Golden Age of Gas”

• External costs of CO2 and health care reflected in policies

• Carbon pricing that’s effective, transparent and economy wide

• Regulations to encourage integration of energy sources within decentralized energy

grids

• Capacity remuneration mechanisms for gas power generation to support deployment

of renewables

• Gas industry focused on safety, efficiency and environment. This includes reducing

methane emissions.

• Further development of global natural gas market

A growth story for natural gas

World natural gas demand by scenario

Global gas demand is projected to plateau from the late-2020s in the 2 °C Scenario

1

2

3

4

5

6

1990 2000 2010 2020 2030 2040

Current PoliciesScenarioNew PoliciesScenario

2 °C Scenario

Thousandbcm

Source : Energy Outlook 2016 IEA

Gas demand growth:

a question of geography

Gas demand by selected regions in the New Policies Scenario

Developing countries lead the growth in global gas demand

150 300 450 600 750 900

India

Latin America

Africa

European Union

Russia

China

Middle East

United States

bcm

2014

Additionalin 2040

Source : Energy Outlook 2016 IEA

Natural Gas Business: Challenges and

Opportunities

• Truly enabling the integration of variable renewable sources (VRES) in the

transition to a low-carbon economy.

• Gaining a significant market share in the mobility sector (specifically in the

heavy duty and maritime sector)

16

Natural gas as transportation fuel

Fuel Consumption of Different vehicles. Equivalences

17

1 Ferry

65 small boats

130 fishing boats

1.300 buses

10.800 taxis

Consumption of

CNG/LNG MW.h/year

395.000

5.900

3.000

290

40

uses as much fuel as

or

or

or

or

80.000 private cars

Natural Gas Business: Challenges and

Opportunities. Gas in a sustainable energy mix

• Development and wide deployment of new zero/low-carbon technologies

associated to the gas industry (e.g. biogas/biomethane, Power-to-gas and

synthetic gases)

18Source: GreenPeace Energy

SYNTHETIC GAS BIOGAS

+

Closing thoughts on energy transition

• Urgency needed to tackle climate change and air quality

• Gas can play important role; need enlightened policies

• Governments provide direction, markets respond

• More investment in technology

• Tireless focus by industry on social license There is a tide in the affairs of men. Which taken at the flood leads on to fortune; Omitted, all the voyage of their life is bound in shallows and in miseries. On such a full sea are we now afloat, And we must take the current when it serves, Or lose our ventures. William Shakespeare, Julius Caesar

Many thanks