SIEW 2011: IEA Chief Economist outlines global energy landscape at 2nd Distinguished Speaker Programme

Rising oil prices and impact of geopolitical unrest on economic recovery and energy security propel natural gas into prominence

1. The International Energy Agency (IEA) estimates that natural gas will overtake coal as a fuel source by 2030 and account for 25 percent of the global energy mix by 2035. Dr Fatih Birol, Chief Economist of IEA, painted the positive outlook for natural gas against a backdrop of global uncertainties impacting the energy sector at the second instalment of the Energy Market Authority (EMA) Distinguished Speaker Programme.

2. With global energy demand growing 36 percent by 2035, Dr Birol highlighted the urgent need to diversify the energy mix and enhance energy security as oil prices enter the "danger zone". He added that geopolitics and energy issues are increasingly interwoven as demonstrated in the Middle East and North Africa (MENA) region. With the region accounting for 90 percent of the net global increase in oil production till 2020, any investment deferment resulting from the current political unrest could have implications for global energy security.

3. At the lecture, themed "A Glimpse into the Energy Future" and attended by more than 350 industry leaders and academia, Dr Birol presented an advance release of the scenario to be outlined in IEA's upcoming World Energy Outlook 20111. This looks at the more prominent role that natural gas is expected to play in enhancing energy security. While coal remains the backbone of global electricity generation, natural gas resources exceed 75 years of current consumption and 250 years of current production. Coupled with growing LNG capacity, natural gas offers significant advantages in providing flexibility for energy diversification and boosting supply security.

4. Nonetheless, Dr Birol highlighted that the increased share of natural gas in the global energy mix is by itself insufficient to limit the average global temperature rise to no more than 2°C. He called on continued government support as a key driver in boosting the use of renewable energy so that its share in the electricity supply rises from 19 percent in 2008 to 32 percent in 2035. Further, the IEA projects that a lower nuclear case – where the decrease in nuclear energy's share of generation from 14 percent today to 10 percent in 2035 – will help push up the demand for coal, gas and renewable sources, producing a corresponding knock-on effect on energy prices.

5. During the session, Dr Birol shared key findings from IEA's special report, "Are We Entering a Golden Age of Gas". He presented a scenario in which the demand for gas is expected to grow by more than 50 percent, with a corresponding increase in gas supply projected, fuelled by the growth of unconventional gas and the expansion of LNG trade. Dr Birol also commented that with the LNG terminal, Singapore is well-positioned to be an LNG hub for the region.

6. Echoing Dr Birol's view on the opportunities in the natural gas market, Mr Chee Hong Tat, Chief Executive of EMA, shared in his welcome remarks that Singapore has seen strong industry interest in LNG. Mr Chee also provided a progress update on Singapore's LNG terminal, which is the first open-access, multi- user LNG terminal in Asia. The terminal is approaching 50 percent completion and is on track for commercial operations by the second quarter of 2013. Located on Jurong Island, the LNG terminal will be able to handle up to 6 million tonnes per annum (Mtpa) of throughput when its three tanks are completed.

7. EMA introduced the Distinguished Speaker Programme in April this year to augment its calendar of thought leadership programmes aimed at inspiring dialogue on emerging energy trends, technologies and solutions. Featuring industry leaders and luminaries in a series of public lectures, the Distinguished Speaker Programme builds on the success of the flagship Singapore International Energy Week in providing platforms for the industry's best minds to debate and exchange best practices, ideas and strategies in the energy space, and contribute to the global effort to secure a more sustainable energy future.

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1 The IEA World Energy Outlook 2011 report is due to be released in November 2011.

About the Energy Market Authority

The Energy Market Authority (EMA) is a statutory board under the Ministry of Trade and Industry. Our main goals are to ensure a reliable and secure energy supply, promote effective competition in the energy market and develop a dynamic energy sector in Singapore. Through our work, we seek to forge a progressive energy landscape for sustained growth. Please visit our website www.ema.gov.sg for more information.

About the Singapore International Energy Week

The 4th Annual SIEW 2011 is the foremost platform for top policymakers, industry players and commentators to discuss energy issues, strategies and solutions. SIEW 2011 brings together the world's leading conferences, exhibitions, workshops and networking events in one week, in one location. Covering key issues such as oil & gas, energy trading, clean energy and smart grids, SIEW 2011 provides the ideal focal point to discuss energy security through the generation of ideas and exchange of best practice. More information about SIEW is available at www.siew.gov.sg.

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Solonia Teodros, Burson-Marsteller for EMA
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Sharon Tan, EMA
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