Introduction

Gas markets have traditionally been regional since they are based on the availability of expensive transport infrastructure. The recent growth of the global LNG market tends to increase, to some extent, interconnections between the North American, the European and the Far Eastern gas markets.
In addition to international fossil fuel prices, further energy prices, including end-user prices by energy and by sector, are available in the complete EnerFuture global forecast service based on the POLES model.

Trend over 2000-2040 – EnerBlue scenario

North America

The North American gas market has historically always had the cheapest price compared to other regional markets, with very few short-term exceptions, mostly due to an earlier start of the liberalization process and enhanced competition for high production levels. After important price spikes during the mid-2000s due to a general perception that the US were running out of gas reserves, the shale gas revolution has progressively flooded the domestic market and depressed prices. The current North American low-price environment is expected to continue with a slight recovery over time, among others due to US plans for large-scale LNG exports and the fact that associated gas (from tight oil production) continues to grow in the US. However, given the flat nature of the US shale gas production cost curve, the influence of exports on domestic prices should remain limited in the mid-term.

Europe

After the 2009-2016 mismatch observed in Europe between very low gas market prices in North-Western Europe and oil-indexed prices dominating continental Europe, the dual pricing system has become unsustainable and producers have been progressively forced to offer also market-based gas prices. Following the oil price collapse of 2015, oil-indexed gas prices collapsed in 2016 and have remained relatively low since then. In the long run, prices may not increase significantly due to possible supply surges from Australian LNG and/or US LNG likely to land in Europe and compete with Russian gas. Even though Russia would want to keep its market shares, which could drive the European gas price up by around 2025, European gas prices are expected to increase moderately in the long run. Up to 2040, and despite the German phase-out from coal-fired electricity generation and an expected increased demand in Europe, global supply is expected to be abundant.

Asia

Gas prices on the Asian market are largely index on the oil price. These have recently collapsed, following the collapse of oil price and the massive increase in new LNG supply (mainly from Australia). As Asian markets progressively absorb the gas glut, prices are likely to increase again, one reason for this being the current Chinese shift from coal-fired electricity generation to power plants fueled with gas and renewables. Conversely, large additional LNG sources are rising on the horizon (e.g. USA, Russia, Qatar). Overall, the Asian gas price is expected to increase in the long run, staying largely above expected gas prices in the North American and even European markets.

EnerOutlook Presentation

EnerOutlook

Download the EnerOutlook 2019 presentation to have an overview of the main outcomes of our central scenario EnerBlue in various world regions.
The presentation includes details on the underlying assumptions of this scenario, along with insightful graphs and learnings on the future of energy systems through 2040.

Download the publication

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