Last week saw BP publish the Fourth Edition of the influential Energy Outlook series, setting out the energy giants’ expectations for global energy to 2035. Of particular relevance to long term nitrogen markets and trade, the report offers a useful overview of the world’s gas supply and consumption to 2035.
Nitrogen markets are inextricably tied to gas prices, with an estimated 70% of global production relying on gas as a primary feedstock. Supporting earlier analysis, BP’s Energy Outlook notes that “natural gas is expected to be the fastest growing of the fossil fuels – with demand rising at an average of 1.9% a year.” Nearly four-fifths of this demand is to support demand growth in non-OECD countries.
The role of shale gas has been covered previously, and indeed Profercy’s latest long term forecast addresses the impact of this on nitrogen capacity in North America and elsewhere. BP expects shale gas to account for 21% of world gas and 68% of US gas production by 2035, with the US becoming energy self-sufficient by this time.
With shale gas offering North America a cheap gas feedstock, numerous nitrogen projects have been announced in recent years. This has the potential to end the USA’s current reliance on nitrogen imports during peak season, and even turn the US into an exporter during the quiet months. Yet, this interpretation is crude and in fact, there are projects in the US that will struggle to reach operation.
Outside the US, the report also notes that both Asia, and to a lesser extent Europe, will be reliant on greater levels of gas imports. With some nitrogen producers in these regions already facing high gas costs, a greater reliance on imports may see significant revisions to nitrogen production in Asia and Europe.
Further information, including the above video interview with BP’s Chief Economist, Christof Rühl, can be found here.
Profercy’s long term analysis on global urea markets was published this month and covers the issues raised above, as well as providing detailed supply, demand and price forecasts. For more information on The Urea Outlook to 2030, please click here.