U.S. Led Global Gas Production with record Price Discounts in 2011

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--World natural gas consumption grew 2.25% in 2011 according to the BP Statistical Review of World Energy 2012. Consumption growth was below average in all regions except North America, where low prices drove robust growth.

Outside North America, the largest gains in the volume of consumption were in China (+21.5%), Saudi Arabia (+13.2%) and Japan (+11.6%). These increases were partly offset by the largest decline on record in E.U. gas consumption (-9.9%). This decline was driven by a weak economy, high gas prices, warm weather and continued growth in renewable power generation.

As global natural gas production grew 3.1%, the U.S recorded the largest volume increase (+7.7%) despite lower gas prices, and remained the world's largest producer.

Output also grew rapidly in Qatar (+25.8%), Russia (+3.1%) and Turkmenistan (+40.6%). This increase in production more than offset declines in Libya (-75.6%) and the U.K (-20.8%). As with consumption, the E.U. recorded the largest decline in production on record (-11.4%), due to a combination of mature fields, maintenance and weak regional consumption.

Following the general weakness of gas consumption growth, global natural gas trade increased by a relatively modest 4% in 2011.

LNG shipments grew 10.1%, with Qatar (+34.8%) accounting for virtually all (87.7%) of the increase. Among LNG importers Japan and the U.K. showed the largest volume increase. LNG now accounts for 32.2% of the global gas trade.

Pipeline gas shipments grew 1.3%, with declines in imports by Germany, the U.K., the U.S. and Italy offsetting increases in China (from TurkmenistanA), Ukraine (from Russia) and Turkey (from Russia and Iran), said the BP report.

Gas prices increased broadly in line with oil prices except in North America, where prices reached record discounts both to crude oil and international gas markets.

"Natural gas has produced some of the biggest changes in global energy markets over the last few years. There is, first, the rapid increase in trade, especially LNG, that has connected hitherto segmented regions in an increasingly flexible manner. And second, the development of unconventional sources in the U.S, which has everyone wondering where gas may next turn into a relatively abundant source. Both of these developments shaped 2011. And, as it happens, they also played a key role in the response to last year's disruptions," said Christof Ruhl, BP's Chief economist.

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