31- www. energy- future. com 3.1- Supply and markets ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??

32- www. world- petroleum. org 3.2- Supply and markets Natural gas prices and the link to oil QEveryone talks about oil prices - but what about natural gas? Isn't that important? AIt sure is. Our economy depends on oil. But for a variety of reasons - eco-nomic as well as environmental - devel-oped countries, especially in Europe, have been shifting to natural gas as their pre-ferred fuel for generating electricity. So when the price of natural gas rises, so does the power bill. For some households and many businesses, that's one of the biggest single drains on their budget. Q But are oil and gas prices connected? They're both hydrocarbons. A Yes and no. When oil prices rise, natural gas prices tend to follow. For one thing, when oil prices rise, the cost of producing oil also rises. And because a lot of our natural gas comes from the same place - as " associated gas" that sits next to the oil in a field - the cost of pro-ducing the gas rises, too. Furthermore, in many parts of the world, historical reasons mean that natural gas supply contracts are negotiated based on the oil price. So, for example, in Europe, the continent's largest gas supplier, Russia's Gazprom, was charging customers about $ 450 per 1,000 cubic metres of gas last year. In mid- 2009, new deals were being struck at just over $ 200. Then there's liquefied natural gas ( LNG). Like the gas Gazprom sells through its pipelines to European customers, LNG is also usually traded under long- term con-tracts - for, say, supply over 20- 25 years. These contracts are also based on the price of oil. LNG prices have also been fall-ing lately. Q That's the " yes" part answered. What about the " no"? A The gas sector is segmented along regional lines in a way the global oil market isn't. So in the US, the world's biggest gas market, the discovery of vast new domestic supplies ( see p55) is putting pressure on local gas prices. It happened at the same time as the oil price fell last year, but for a different reason. Then there's the LNG spot market. About 15% of LNG supply is not contracted through long- term arrangements, but gets traded cargo- by- cargo, according to the dynamics of supply and demand. When South Korea and Japan, the two biggest LNG users in the world, need more LNG, their buying can push up prices. However, they've also been hit by the global eco-nomic recession and demand for gas in both countries is way down. LNG will probably stay cheap for a while, too, because countries such as Australia, Nigeria and Qatar have been developing new LNG- export projects. Soon, there could be a glut of LNG on the world market, espe-cially as the US no longer looks like the big market for LNG that many expected it to be. Q So if prices for piped gas get too ex-pensive, everyone can just import LNG instead? A Only if they build special terminals to re-ceive the stuff. In fact, the natural gas busi-ness could really be called an infrastruc-ture business. Pipelines, terminals, lique-faction plants - there's the essence. There's no shortage of gas on the horizon, but once consumption starts to rise quickly again it's the countries that built the neces-sary infrastructure that will have a steady stream of affordable gas. ?? Countries that built the necessary infrastructure will have a steady stream of affordable gas