The future of natural gas at a time of unpredictability By Nobuo Tanaka
To mark Japan’s hosting of the 2017 Council meeting, the IGU Magazine asked the Japanese member of IGU’s Wise Persons group to look at the opportunities and challenges for natural gas. We also have a timeline of key develop ments in Japan’s gas market. “Unpredictability” was a popular buzzword at the Gastech 2017 conference held in April in Tokyo. Thanks to the US shale revolution the Henry Hub gas price has been so low that gas became the leading power generation source in the US in 2016, replacing coal and reducing CO2
v Nobuo Tanaka addressing Gastech 2017 in Tokyo in April. He chaired the Japan Gastech Consortium.
emissions. This development in the world’s largest gas producer and consumer contributed to global energy-related CO2 emissions being flat for a third straight year in 2016 despite global economic growth. This is a triple win for natural gas simultaneously addressing
further expand gas consumption. The Golden
environmental concerns and economic growth
Age of Gas is happening in the US and
as well as energy security.
elsewhere thanks to the new US LNG supplies.
The recently announced “Energy Dominance”
And yet, President Trump’s foreign policy is
strategy of the US favours domestic production
fostering unprecedented unpredictability as
of fossil fuels and is likely to further encourage
regards the geopolitics in the Middle East. His
shale oil and gas production. Indeed, the US is
strong support for Saudi Arabia seemed to
the game changer of the natural gas market.
encourage three Gulf nations and Egypt to cut
According to the IEA (Gas Market Report 2017),
off diplomatic relations with Qatar in June. In
the US will account for 40% of the world’s
fact, Qatar has played a pivotal role in LNG
extra gas production to 2022, leading to the
security by providing more than half of global
second stage of the shale gas revolution as new
uncontracted LNG volumes in the tightened
LNG export projects expand gas trade. Over 70
market caused by the Fukushima nuclear
bcm of new liquefaction capacity is under
accident (IEA’s Global Gas Security Review
construction in the US with many more projects
2016). President Trump has also been question
proposed. Expanding US LNG exports will
ing the value of the nuclear agreement reached
reshape the LNG market with market based
with Iran in 2015, which is known as the Joint
pricing and flexible destination clauses. In Asia,
Comprehensive Plan of Action (JCPOA). So far
lower prices may bring new LNG importers into
he agrees with Iran’s compliance with the
the market while encouraging large users to
JCPOA but, if the US should revoke the deal, it
24 T h e f u t u r e o f n a t u r a l g a s a t a t i m e o f u n p r e d i c t a b i l i t y
