What can we expect from the energy markets in 2017?

Transcription

1 What can we expect from the energy markets in 2017? Luc De Leersnyder & Jens Lievens E&C Consultants 23/11/2016

2 What do we do? ENERGY PROCUREMENT CONSULTANCY Gas & electricity Focused on price, not on consumption reduction Consulting, not supplying, trading or brokering CONSULTANT SUPPLIER CLIENT 2

3 Integrated international approach Since its creation in 2005, E&C has grown organically, responding to the request of our clients. 12 offices serving 28 countries 3

4 E&C s global approach Europe & North- America: full service Rest of the world light approach: - epoint: follow-up of global consumption & cost - follow-up of deregulation process - Support of central buyers for tenders & price fixing in deregulated markets 4

5 Energy markets today

6 Oil market

7 World energy demand 7 25/11/2016

8 Oil price today 8 25/11/2016

9 Oil price today /01/15 1/06/15 1/11/15 1/04/16 1/09/16 1/01/05 1/06/05 1/11/05 1/04/06 1/09/06 1/02/07 1/07/07 1/12/07 1/05/08 1/10/08 1/03/09 1/08/09 1/01/10 1/06/10 1/11/10 1/04/11 1/09/11 1/02/12 1/07/12 1/12/12 1/05/13 1/10/13 1/03/14 1/08/14 Axis Title Brent M+1 M+1$ M+1

10 Oil price today /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/2016 Brent Futures M+1 Brent $ Brent

11 11 World oil production World oil production Thousand barrels per day Total North America Total S. & Cent. America Total Europe & Eurasia Total Middle East Total Africa Total Asia Pacific

12 12 World oil consumption World oil consumption Thousand barrels per day Total North America Total S. & Cent. America Total Europe & Eurasia Total Middle East Total Africa Total Asia Pacific

13 13 North American oil production TBD North American Oil Production US Canada Mexico

14 Merit order oil production 80 Estimation of the oil production merit order of 20 years ago Production costs in $/bbl Giant oil fields Traditional offshore Production costs in $/bbl Estimation of the current oil production merit order Gas & coal to fuel Deepwater offshore Biofuel Tar sands Giant oil fields Traditional offshore 14

15 US oil rigs evolution US rigs evolution /01/12 01/03/12 01/05/12 01/07/12 01/09/12 01/11/12 01/01/13 01/03/13 01/05/13 01/07/13 01/09/13 01/11/13 01/01/14 01/03/14 01/05/14 01/07/14 01/09/14 01/11/14 01/01/15 01/03/15 01/05/15 01/07/15 01/09/15 01/11/15 01/01/16 01/03/16 01/05/16 01/07/16 01/09/16 Axis Title Oil Gas 25/02/2015 E&C Market info slide 15

16 EUR/USD rate EUR/USD 1,50 1,40 1,30 1,20 1,10 1,00 1/01/09 1/04/09 1/07/09 1/10/09 1/01/10 1/04/10 1/07/10 1/10/10 1/01/11 1/04/11 1/07/11 1/10/11 1/01/12 1/04/12 1/07/12 1/10/12 1/01/13 1/04/13 1/07/13 1/10/13 1/01/14 1/04/14 1/07/14 1/10/14 1/01/15 1/04/15 1/07/15 1/10/15 1/01/16 1/04/16 1/07/16 1/10/16 EUR/USD % 18/11/2016 1,0629-0,82% 17/11/2016 1,0717 0,14% 16/11/2016 1,0702-0,59% 15/11/2016 1,0765-0,11% 14/11/2016 1,0777-1,16% 25/02/ E&C Market info slide 16

17 Conclusion: increased volatility due to Higher marginal costs of producing oil Improving technology efficiency 17 Fundamentally, supply and demand will determine prices. Supply : OPEC fears and belief Demand: Sustained economic recovery? Other: Stronger dollar evolution. Interest rate hike? Trump policy gives hope to US riggers

18 Gas market

19 19 EU forward gas prices today /04/07 16/08/07 16/12/07 16/04/08 16/08/08 16/12/08 16/04/09 16/08/09 16/12/09 16/04/10 16/08/10 16/12/10 16/04/11 16/08/11 16/12/11 16/04/12 16/08/12 16/12/12 16/04/13 16/08/13 16/12/13 16/04/14 16/08/14 16/12/14 16/04/15 16/08/15 16/12/15 16/04/16 16/08/16 /MWh Natural gas l Cal contracts Y+1 UK: NBP BE: Zee DE: GPL NL: TTF IT: PSV

20 EU forward gas prices today /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/ /01/ /03/ /05/ /07/ /09/ /11/2016 /MWh European forward gas prices TTF Y+1 NCG Y+1 Zee Y+1 NBP Y+1 ( /MWh) PEG N Y+1

21 Natural gas l Pacific vs European vs North American prices Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 /MWh Japan NBP UK Henry Hub 25/02/ E&C Market info slide 21

22 Natural gas l global production World gas production Billion Cubes Metres Total North America Total S. & Cent. America Former Soviet Union Total Middle East Total Africa Total Asia Pacific 25/02/ E&C Market Rest info of Europe slide 22

23 Natural gas I global consumption World gas consumption Billion Cubes Metres Total Africa Total Asia Pacific 25/02/ E&C Market info slide 23 25/11/2016 Total North America Total Europe & Eurasia Total S. & Cent. America Total Middle East

24 Main figures Global natural gas consumption + 2.2% + 2.2% +1.4% +0.4% +1,7% growth: EU gas consumption: - 9.9% - 2.3% -1.1% -11.6% +4,6% Global natural gas production growth: + 3.1% + 1.9% +1.1% +1.6% +2,2% EU gas production decline: -11.4% - 5.5% -0.5% -9.8% -8% World proven gas reserves : tcm tcm tcm 187 tcm tcm Enough for: 63.6 years 55.7 years 55.4 years 54.1 years 52.8 years 24

25 Natural gas l Storage levels 01/08/2016 Capacity (mcm) Storage (mcm) % full Austria ,94% Belgium ,29% Bulgaria ,44% Croatia ,35% Czech Republic ,56% Denmark ,05% France ,70% Germany ,95% Hungary ,99% 4/03/12 4/07/12 4/11/12 4/03/13 4/07/13 4/11/13 4/03/14 4/07/14 Austria Bulgaria Denmark Germany 4/11/14 4/03/15 4/07/15 4/11/15 4/03/16 4/07/16 0 Belgium Czech Republic France Hungary Italy ,01% Latvia ,32% The Netherlands ,77% Poland ,24% Portugal ,46% Slovakia ,26% Spain ,87% UK ,60% Total hubs EU ,07% 25 Source: GSE Aggregated Gas Storage Inventory

26 Natural gas Liquefaction plants cumulative capacity gas (million m³) on-stream recently on-stream under construction planned Source: IGU World LNG Report 2016, Global LNG Info (based on data of 2015 and data as of July 2016) 26

27 LNG is not arriving in a market that is short 27

28 Coal market

29 29 Coal markets /05/03 2/10/03 2/03/04 2/08/04 2/01/05 2/06/05 2/11/05 2/04/06 2/09/06 2/02/07 2/07/07 2/12/07 2/05/08 2/10/08 2/03/09 2/08/09 2/01/10 2/06/10 2/11/10 2/04/11 2/09/11 2/02/12 2/07/12 2/12/12 2/05/13 2/10/13 2/03/14 2/08/14 2/01/15 2/06/15 2/11/15 2/04/16 2/09/16 $/tonne Coal $/tonne Y+1 Y+1 21/11/16 63,75 18/11/16 65,70 17/11/16 66,48 16/11/16 70,08 15/11/16 71,25

30 30 Coal markets Cal 17 Cal 18 Cal 19 21/11/16 59,97 53,97 52,91 18/11/16 61,81 55,60 54,61 17/11/16 62,03 55,15 54,26 16/11/16 65,48 57,61 56,67 15/11/16 66,19 58,57 57, /01/13 1/03/13 1/05/13 1/07/13 1/09/13 1/11/13 1/01/14 1/03/14 1/05/14 1/07/14 1/09/14 1/11/14 1/01/15 1/03/15 1/05/15 1/07/15 1/09/15 1/11/15 1/01/16 1/03/16 1/05/16 1/07/16 1/09/16 1/11/16 /tonne Coal /tonne Cal16 Cal17 Cal18 Cal19

31 Main figures Global coal consumption growth: + 2,5% +3% +0,4% -1,8% Non-OECD consumption growth: + 5,4% +3,7% +1,1% -0,3% OECD consumption growth: -4,2% +1,4% -1,5% -6,1% Global coal production growth: +2% +0,8% -0,7% -4,0% Non-OECD production growth : + 3,9% +1,3% -1,4% -2,6% OECD production growth: -3,3% -0,7% +1,5% -8,1% World proved coal reserves at year end: 861 billion tonnes 891 billion tonnes 892 billion tonnes 892 billion tonnes Enough for: 109 years 101 years 110 years 114 years Source: BP Statistical Review 31

32 Power market

33 Power markets European forward electricity prices /MWh 01/01/12 01/03/12 01/05/12 01/07/12 01/09/12 01/11/12 01/01/13 01/03/13 01/05/13 01/07/13 01/09/13 01/11/13 01/01/14 01/03/14 01/05/14 01/07/14 01/09/14 01/11/14 01/01/15 01/03/15 01/05/15 01/07/15 01/09/15 01/11/15 01/01/16 01/03/16 01/05/16 01/07/16 01/09/16 01/11/16 15 BE Y+1 NL Y+1 DE Y+1 FR Y+1 UK Y+1 ES Y+1 IT Y+1 PL Y+1 CZ Y+1 SK Y+1 HU Y+1 Nordpool SYS Y+1 Y+1 BE FR DE NL UK IT ES PT PL HU SK CZ 21/11/16 40,67 47,98 30,25 35,73 51,99 44,00 43,38 43,45 36,18 37,41 31,30 30,50 18/11/16 41,20 49,61 30,97 36,13 52,47 44,00 43,80 43,87 36,11 37,99 31,95 31,25 17/11/16 41,19 48,35 30,83 36,03 52,23 44,50 43,63 43,70 36,09 37,74 32,65 31,95 16/11/16 41,58 47,86 31,69 36,55 52,14 44,50 44,00 44,07 36,14 37,91 32,65 31,95 15/11/16 42,14 49,62 32,30 36,75 52,12 44,88 44,15 44,22 36,28 38,07 33,30 32,60 33

34 Main figures Total EU installed generation* 896 GW 932 GW 996 GW NA capacity: Total EU electricity production**: 3303 TWh 3298 TWh 3264 TWh 3166 TWh Total EU installed capacity growth + 3,1% + 4% + 6,9% NA Total EU production growth: -2,0% -0,2% -1,0% -3,0% Share of renewables in EU electricity production***: 21,4% 24,2% 27,2% NA Share of renewables in EU capacity growth: 71,3% 70% NA NA Worldwide production growth*: + 3% + 2,1% +2,4% +1,5% 34

35 Electricity production 35 25/11/2016

36 Renewable energy evolution 36 25/11/2016

37 Marginal cost pricing /MWh Disposable for pay-back on fixed costs Marginal cost CO2 CO2 Marginal cost = variable cost to produce an extra MWh of electricity Renewable Nuclear Coal Gas 37

38 Electricity generation mix France FRANCE'S ELECTRICITY GENERATION MIX % 4% 1%2% 6% 76% Nuclear Thermal Hydro Wind power Solar Bioenergy Source: French transmission grid operator RTE 38 25/11/2016

39 Electricity Analysis CURRENT OUTAGES 39 REACTOR NAME CAPACITY (MW) OUTAGE START EXPECTED RESTART REASON Belleville 1 1,300 Nov. 12 Nov. 21 ND Unplanned outage Cruas Nov. 8 Nov. 27 Planned outage Tricastin Oct. 22 Dec. 31 Statutory outage Cruas Oct. 15 Nov. 21 Planned outage Cattenom 3 1,300 Sep. 24 Dec. 20 Statutory outage Dampierre Sep. 24 Nov. 30 Planned outage Gravelines Sep. 17 Dec. 31 Planned outage Civaux 2 1,500 Sep. 10 Nov. 30 Statutory outage St Laurent Sep. 3 Nov. 27 Statutory outage Bugey Aug. 27 Dec. 31 Statutory outage Gravelines Aug. 20 Nov. 24 Statutory outage Tricastin Aug. 13 Dec. 31 Statutory outage Fessenheim June 13 Mar. 31, 2017 Statutory outage Tricastin May 7 Dec. 31 Statutory outage Paluel 1 + 1,300 Apr. 9 Nov. 19 ND Statutory outage Gravelines Apr. 9 June 30, 2017 Statutory outage Bugey Aug. 27, 2015 May. 31, 2017 Statutory outage Paluel 2 1,300 May 16, 2015 Nov. 30, 2017 Statutory outage TOTAL OUTAGES 18,400

40 Electricity Analysis PLANNED OUTAGES IN FUTURE Fessenheim Dec. 10 Jan. 3, 2017 Planned outage Gravelines Dec. 17 Jan. 10, 2017 Planned outage Civaux 1 1,500 Dec. 23 Jan. 15, 2017 Planned outage Tricastin Dec. 23 Jan. 15, 2017 Planned outage Gravelines Feb. 4, 2017 Apr. 7, 2017 Statutory outage Paluel 3 1,300 Feb. 11, 2017 Aug. 18, 2017 Statutory outage St Alban 1 1,300 Feb. 17, 2017 Aug. 5, 2017 Statutory outage Blayais Feb. 18, 2017 Apr. 21, 2017 Statutory outage Cattenom 2 1,300 Feb. 18, 2017 May 27, 2017 Statutory outage Chooz 1 1,500 Feb. 25, 2017 May 14, 2017 Statutory outage Nogent 2 1,300 Mar. 4, 2017 Apr. 10, 2017 Planned outage Golfech 2 1,300 Mar. 11, 2017 Apr. 16, 2017 Planned outage 40

41 Electricity Analysis RECENT RESTARTS REACTOR NAME CAPACITY (MW) OUTAGE START RESTART DATE REASON Penly 2 1,300 Aug. 27 Nov. 14 Statutory outage Flamanville 1 1,300 Nov. 11 Nov. 14 Planned outage Chinon Oct. 8 Nov. 14 Planned outage St Laurent Nov. 8 Nov. 9 Unplanned outage Cruas July 30 Nov. 6 Statutory outage Chooz 1 1,500 Oct. 29 Nov. 1 Planned outage Cattenom 1 1,300 May 28 Oct. 25 Statutory outage Chooz 1 1,500 Oct. 22 Oct. 24 Planned outage Blayais Oct. 19 Oct. 21 Unplanned outage Flamanville 1 1,300 Sep. 17 Oct. 20 Planned outage 41

42 42 Electricity l France l EEX Cal l Base French EEX Cal's Baseload /01/14 1/03/14 1/05/14 1/07/14 1/09/14 1/11/14 1/01/15 1/03/15 1/05/15 1/07/15 1/09/15 1/11/15 1/01/16 1/03/16 1/05/16 1/07/16 1/09/16 1/11/16 /MWh Cal17 Cal18 Cal19 French EEX Cal 17 Base Cal 18 Base Cal 19 Base 21/11/ ,98 36,78 37,38 18/11/ ,61 36,88 37,13 17/11/ ,35 36,65 36,30 16/11/ ,86 37,20 37,70

43 43 France spot prices 73,82 47,60 47,60 47,02 48,86 43,02 42,93 43,25 34,81 38,14 34, /01/07 1/05/07 1/09/07 1/01/08 1/05/08 1/09/08 1/01/09 1/05/09 1/09/09 1/01/10 1/05/10 1/09/10 1/01/11 1/05/11 1/09/11 1/01/12 1/05/12 1/09/12 1/01/13 1/05/13 1/09/13 1/01/14 1/05/14 1/09/14 1/01/15 1/05/15 1/09/15 1/01/16 1/05/16 1/09/16 /MWh French EPEX D+1 Spot Yearly Average

44 Event agenda of the French nuclear crisis 55 Cal 17 Base /MWh 8 th Nov : Grid operator announced France could face winter power cuts 50 20th July: Reduction of EDF s nuclear 2016 output target 2 nd -3 rd Nov: Restart of 5 reactors delayed until the end of the year 3 rd revision of 2016 output target th June: Investigation of 18 reactors required due to potential anomalies on steam generator 18 th Oct: 5 reactors to be stopped to be checked before mid January st Sept: 2 nd Reduction of EDF s nuclear 2016 output target 20 44

45 45 Electricity l Belgium l Endex Year Ahead Endex BE Y /09/04 06/01/05 06/05/05 06/09/05 06/01/06 06/05/06 06/09/06 06/01/07 06/05/07 06/09/07 06/01/08 06/05/08 06/09/08 06/01/09 06/05/09 06/09/09 06/01/10 06/05/10 06/09/10 06/01/11 06/05/11 06/09/11 06/01/12 06/05/12 06/09/12 06/01/13 06/05/13 06/09/13 06/01/14 06/05/14 06/09/14 06/01/15 06/05/15 06/09/15 06/01/16 06/05/16 06/09/16 /MWh Endex BE Y+1 EndexBE Y+1 14/10/16 38,45 13/10/16 38,14 12/10/16 37,85 11/10/16 37,87 10/10/16 38,24

46 46 Electricity l Belgium l Endex Cal /09/16 1/01/14 1/03/14 1/05/14 1/07/14 1/09/14 1/11/14 1/01/15 1/03/15 1/05/15 1/07/15 1/09/15 1/11/15 1/01/16 1/03/16 1/05/16 1/07/16 /MWh Endex BE Cal contracts Cal 17 Cal 18 Cal 19 Endex BE Cal17 Cal18 Cal19 14/10/ ,45 34,53 33,88 13/10/ ,14 34,02 33,63 12/10/ ,85 33,80 33,20 11/10/ ,87 33,67 33,48 10/10/ ,24 33,70 33,50

47 Electricity generation Belgium BELGIUM'S ELECTRICITY GENERATION MIX % 2% 5% 8% 38% 0% 38% Fossil fuel Nuclear Hydro Wind Solar Biomass Biogass and Waste Pumped Hydro Source: FEBEG 47

48 Electricity generation Germany /11/2016

49 Germany s nuclear exit plan 49 25/11/2016

50 50 Electricity l Germany l EEX Cal Base EEX Cal contracts Base /01/12 1/03/12 1/05/12 1/07/12 1/09/12 1/11/12 1/01/13 1/03/13 1/05/13 1/07/13 1/09/13 1/11/13 1/01/14 1/03/14 1/05/14 1/07/14 1/09/14 1/11/14 1/01/15 1/03/15 1/05/15 1/07/15 1/09/15 1/11/15 1/01/16 1/03/16 1/05/16 1/07/16 1/09/16 1/11/16 /MWh Cal17 Cal18 Cal19 Cal20 EEX Cal 17 Cal 18 Cal 19 Base Base Base 21/11/ ,25 26,97 25,97 18/11/ ,97 27,27 26,10 17/11/ ,83 26,97 25,90 16/11/ ,69 27,29 25,89 15/11/ ,30 27,53 26,60

51 51 Renewables versus coal/gas and uncertainty of nuclear capacity in Belgium and France

52 Conclusion Decline in demand Excess coal supplies Shale / oil gas revolution Green energy revolution Supply > demand More costly marginal production Lower prices Increased volatility 4 revolutions 52 25/11/2016

53 What to do with increasing volatility? What is the impact of the energy cost on your business P&L? Determine a strategy: budget, market or survival risk. 53

54 More information? Luc De Leersnyder Director d: m:

55 More information? Jens Lievens Business Developer d: m:

56 Questions?