Spencer Dale, group chief economist
Global proved gas reserves in 2017 rose slightly by 0.4 trillion cubic metres (tcm) or 0.2% to 193.5 tcm. This is sufficient to meet 52.6 years of global production at 2017 levels.
Israel was the largest single contributor to growth (0.3 tcm), while the CIS region also added 0.2 tcm to reserves. By region, the Middle East holds the largest proved reserves (79.1 tcm, 40.9% of the global total), followed by CIS (59.2 tcm, a 30.6% share).
Note: Lags in reporting official data mean that 2017 figures for many countries are not yet available.
2017 was a bumper year for natural gas. Global natural gas production increased by 131 billion cubic metres (bcm), or 4%, almost double the 10-year average growth rate of 2.2% – the fastest rate since the immediate aftermath of the financial crisis.
Russian growth was the largest by far at 46 bcm, (8.2%) followed by Iran at 21 bcm (10.5%), Australia at 17 bcm (18%) and China 11 bcm (8.5%).
2017 was a bumper year for natural gas. Gas consumption rose by 96 bcm, or 3% – the fastest growth since 2010.
The single biggest factor driving global gas consumption last year was the surge in Chinese gas demand (31 bcm) where consumption increased by over 15%, accounting for around a third of the global increase in gas consumption. The Middle East grew 28 bcm and Europe 26 bcm. Consumption in the US fell by 1.2%, or 11 bcm.
Gas prices rose in Europe, Asia and North America in 2017, but remain below the 10-year average. Over the past year, European and Asian have been supported by increasing oil, coal and carbon prices.
Due to the growth in LNG trade, a growing integration can already be observed in global gas prices. The correlation between European prices and Asian spot LNG prices – represented by the Japan Korea Marker (JKM) – was quite high since the previous LNG wave over 2009-11.
But more recently, the correlation between these markets and US gas prices has also begun to increase, consistent with Henry Hub increasingly playing the role as the anchor price for global gas prices after the US started exporting LNG from the Lower 48 in early 2016. Indeed, JKM prices have over the past couple of years fluctuated within the range of US LNG short-run operating costs and its full-cycle costs.
Gas trade expanded by 63 bcm, or 6.2%, with growth in liquified natural gas LNG outpacing growth in pipeline trade.
The increase in gas exports was driven largely by Australian and US LNG (up by 17 and 13 bcm respectively), and Russian pipeline exports (15 bcm).
LNG increased by over 10% in 2017, its strongest growth since 2010, aided by the start-up of new LNG trains in Australia and the US. China’s increased need for LNG accounted for almost half of the global expansion, with China overtaking Korea to be the world’s second largest importer of LNG after Japan.