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International Gas
October 2020
Industry expected
to rebound in 2021
Passionate about Progr is making dreams come
ess alive
International Gas
October 2020
Published by International Systems and Communications Limited (ISC)
in conjunction with the International Gas Union (IGU).
Copyright © 2020. The entire content of this publication is protected by copyright, full details
of which are available from the publisher. All rights reserved. No part of this publication may
be reproduced, stored in retrieval systems or transmitted in any form or by any means –
electronic, mechanical, photocopying, recording or otherwise – without the prior permission
of the copyright owner.
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Vision and Mission
The International Gas Union (IGU) is a worldwide, non- IGU works to improve the competitiveness
profit organisation promoting the progress of the gas of gas in the world energy markets by promoting
industry. Through its many member countries and transparency, public acceptance efforts and the
corporations representing over 95% of the global gas removal of supply and market access barriers.
market, IGU covers all aspects of the gas industry. IGU seeks to collaborate with governmental
agencies and multilateral organisations to
Vision demonstrate the economic, social and
As the global voice of gas, IGU seeks to improve the environmental benefits of gas in the global
quality of life by advancing gas as a key contributor energy mix.
to a sustainable energy future. IGU supports and facilitates the development
of new technologies and best practices, while
Mission emphasising sound environmental performance,
IGU is the key and credible advocate of political, safety, reliability and efficiency across the entire
technical and economic progress of the global gas value chain.
industry, directly and through its members and in IGU maximises the value of its services to
collaboration with other multilateral organisations. members and other stakeholders.
4 Visi o n a n d M i s s i o n
HOW CAN WE PROVIDE
ACCESS TO ENERGY
WHILE MINIMISING
NEGATIVE IMPACTS ON
THE ENVIRONMENT?
Natural gas – providing more and cleaner energy
www.shell.com/roleofnaturalgas
Developing biogas
in our towns
to fuel the agricultural sector
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in our rural communities.
ENGIE, solutions to support
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Alongside our partners, we are investing €800 million in green gas
between now and 2022 in France. We are banking on biogas,
in particular by working with farmers whose waste products we recycle,
thus contributing to the agro-ecological transition.
For more information, visit engie.com
Contents
OCTOBER 2020
Introduction Why LNG is the best deep-sea marine fuel
option today 44
Vision and Mission 4
By Peter Keller
Message from the President and
the Secretary General 8
News 53
Update on IGU’s current work programme 12
By Jeongwook Khang IGU awards at WGC 2021 56
Reports from the Regional Coordinators 60
Members’ corner 64
Features 17
Presenting IGU’s new members 68
The mixed impacts of coronavirus on
Activities of IGU 72
the Latin American gas markets 20
By Mauro Chavez and Rodrigo Rosas Global Gas Report predicts growth will resume 76
Cost-effective and clean ways of producing IGU publishes latest wholesale gas price survey 78
hydrogen from natural gas 26 Gas technology and innovation for a
By Alexander Ishkov, Konstantin Romanov, sustainable future 80
Roman Teterevlev and Maximilian Kuhn
The roll-out of hydrogen in Korea 32
IGU Organisation 84
By Yoon Namgoong
Members of IGU 86
Smart gas metering: A Portuguese project 38
By Nuno Nascimento and Mariana Paiva Events and Acknowledgements 88
The opinions and views expressed by the authors in this magazine are not necessarily those of IGU, its members or the publisher. While every care has been
taken in the preparation of this magazine, they are not responsible for the authors’ opinions or for any inaccuracies in the articles.
7
I NTRODUCT I ON
MESSAGE FROM THE PRESIDENT
AND THE SECRETARY GENERAL
Dear Colleagues, ful webinars, since we launched the
Welcome to the final edition of the service this summer, and plan to
IGU print magazine. continue with this new feature. While
It is hard to believe, but we are some of the webinars will be com
now well into year three of the Korean pletely open to the public, others will
Presidency, and this year has been be restricted to IGU members only.
one to put us all to a test. On April 27, we released the 2020
We are so proud to represent an World LNG Report, our flagship annual
industry that showed commitment publication, providing key insights into
and compassion in navigating this LNG industry developments during
challenging time. We are proud of 2019 and a glimpse into the future of
the people that continued to not key developments and trends in the
only reliably deliver essential energy world of LNG.
to markets, but also support their In June, we released the first IGU
communities and frontline workers. digital magazine, Global Voice of Gas
Our hats are off to all of you! (GVG). GVG will replace the physical
While much progress has been magazine, and it will set a new
made in coming out of the Covid-19 standard in communication for the
pandemic health crisis, and the signs natural gas community worldwide.
of economic recovery may be emerg Produced in collaboration with
Joo-Myung (Joe) Kang (right) and
ing, there is still some uncertainty Luis Bertrán Rafecas. Natural Gas World, GVG will be a
ahead, and we continue to operate quarterly digital magazine bringing
in an adaptive environment. in the key global energy discussions. new insights and analysis to the global
Here at IGU, the team has also been We have been learning and adapting gas community.
working hard to actively respond to to the new environment to make sure On July 2, 2020, we released the
this new environment and focus on that we are there for the industry Wholesale Gas Price Survey – 2020
delivering value to our members. effectively and timely. Edition, another valued flagship report.
We have redoubled our digital efforts, The survey is the 12th in a series that
and despite the travel restrictions, Key developments began in 2005.
see great engagement from the IGU These are some of the highlights from Also in July, we published, in
membership taking advantage of the IGU activities, since our last update. collaboration with the Boston
digital connectivity and participating Consulting Group, and funding
in our new webinar service. We have Reports and publications support from BP and Snam, a new
successfully launched our flagship IGU has launched a new webinar series. key report Gas Technology and
reports and continued participating We have already delivered five success Innovation for a Sustainable Future
8 Message from the President and the Secretary GeneralI NTRODUCT I ON
that quantifies the contribution that The election will take place Research, development and
gas technologies can make to the during the virtual Council meeting innovation (RD&I) play a key role for
success of the global energy transition, on November 18-19, 2020. For more the gas industry and the challenges
help-ing to build sustainable cities information about the election and and the opportunities that RD&I
and communities and to provide voting procedures, please contact can address are critical to future
access to affordable and clean energy. the IGU Secretariat. growth and development. More
It features robust analysis demon broadly, the industry must demon
strating economic deployment Pandemic Advisory Group strate that gas is the fastest, most
potential across 12 gas technology The Pandemic Advisory Group was economical way to a sustainable
categories, which cumulatively can established to provide advice and energy future through innovations
help avoid 12 Gigatons of CO2 guidance to the IGU leadership on in gas technology.
emissions, or a third of all global how to best cope and navigate The IGU Research Conference
energy sector emissions. through the challenges brought serves to facilitate the discussion and
In early August, together with about by the global pandemic. debate around these issues as well as
research company BloombergNEF The first greatest near-term challenge to display the technological develop
(BNEF) and Snam, we released the was to review the manner in which ments becoming available to support
annual Global Gas Report 2020. This the fall Executive Committee and the industry's future.
year’s edition traditionally reviews Council meetings were to be held You will be able to learn more
key global industry developments virtually, including conducting the details of these events and much
and major trends, as well as assessing important 2024-2027 Presidential more as you read through this
the impact of Covid-19 on the industry election. The group has also been magazine edition.
and recovery projections. It also working on the process and actions Last but not least, we continue
features a special focus chapter on the needed in case WGC2021 would be working very hard on a smooth
prospects for global hydrogen markets postponed to 2022. transition to our Permanent Head
development and what needs to quarters in London by July 2021.
happen on the policy side for these Future event news As always, we encourage your
prospects to materialise. We are pleased to announce comments and feedback. It is our
If you haven’t already, grab together with our co-organisers, the utmost priority to listen to our mem
your copies of these reports at: Gas Technology Institute (GTI) and the bers’ needs. Please get in touch by
www.igu.org. International Institute of Refrigeration writing to us at info@igu.org.
(IIR) that the world’s most important Thank you for your continued
Election for the Presidency liquefied natural gas conference, support and active engagement as
of IGU 2024-2027 LNG2025, will be held in Doha, Qatar. we work to advance the natural gas
On June 3, 2020, the Executive We congratulate Qatar and wish them industry and enhance IGU’s relevance
Committee endorsed Orlando success in the preparations! in this changing global climate.
Cabrales Segovia from Colombia We would also like to share that
and Andrea Stegher from Italy, as the all IGU Charter Members have been Joo-Myung (Joe) Kang
candidates for the post of IGU invited to submit an Expression of IGU President
President 2024-2027 and host of the Interest (EOI) to host the IGU Research Luis Bertrán Rafecas
30th World Gas Conference. Conference (IGRC) in 2023. IGU Secretary General
Message from the President and the Secretary General 9We see And in natural gas, possibilities in the smart partner the sun and wind. to renewables.
That keeps We see
the lights possibilities
shining bright. everywhere.
From renewable energy and
cleaner-burning natural gas to
advanced fuels and new low carbon
businesses, BP is working to make
energy cleaner and better.
Natural gas burns 50% cleaner than coal in power generation.I NTRODUCT I ON Update on IGU’s current work programme IGU’s committees and task forces are continuing their work under the Korean Presidency. By Jeongwook Khang IGU’s 2018-2021 work programme is issues across the global gas industry at: Future gas demand in the world being carried out under the theme and cover the full gas value chain. energy mix; Future gas exploration “A Sustainable Future – Powered by The call for papers was launched on and development to satisfy demand; Gas” and the Union’s 11 committees May 29 and the response has been and Digitisation in the E&P of natural and two of the three task forces are excellent. There is still time for sub gas. It is also organising two T&I now focusing on preparations for missions via www.wgc2021.org as sessions on: Frontier E&P tech the 28th World Gas Conference, the closing date is the end of 2020. nologies for natural gas; and Gas which will be held in Daegu, Korea, Abstracts submitted for each topic production stimulation and June 21-25, 2021. will be assessed on a range of criteria recovery improvement. The committees and task forces including originality, objectivity and The R&D and Innovation (with the exception of Task Force 1) quality of exposition, while geo Committee is responsible for three are responsible for organising WGC graphical diversity will be sought for II sessions looking at: Decarbon 2021’s technical programme. There each session. isation: The role of gas technologies will be 39 Industry Insight (II) sessions To give some examples of in moving towards a low-carbon and 26 Technology and Innovation the topics, the Exploration and society; Decentralisation: The role of (T&I) sessions, which will look at Production (E&P) Committee is gas technologies to realise a resilient, commercial, strategic and technical organising three II sessions looking robust and smart society; and Game- Members of the Strategy Committee during their last physical meeting in Tel Aviv in February. 12 Update on IGU’s current work programme
I NTRODUCT I ON
IGU committees and task forces chairs and technical sessions at WGC 2021
Industry Technology &
Insight Innovation
Exploration and Production Ekaterina Litvinova, Russian Federation 3 2
Storage John Heer, USA 4 2
Transmission Patrick Pelle, France 3 3
Distribution José Carlos Broisler Oliver, Brazil 2 2
Utilisation Roger Serrat, Spain 3 3
Sustainability M. Azhar A. Satar, Malaysia 4 3
Strategy Dr Gerald Linke, Germany 4 3
Gas Markets Christina Zhaoyan Liu, China 3 2
LNG Farid Berrahou, Algeria 3 2
Marketing and Communications Pierre Bartholomeus, The Netherlands 3 2
R&D and Innovation Dr Hisataka Yakabe, Japan 3 2
Task Force 1: Strategic Communications Mark McCrory, United Kingdom * *
and Outreach
Task Force 2: Energy for All Barbara Jinks, Australia 2 -
Task Force 3: Energy Policy Hedayat Omidvar, Iran 2 -
Totals 39 26
*Task Force 1’s role is to provide support, guidance and strategic direction for the Public Affairs Director and his team and it does not normally contribute to
the WGC 2021 roster of papers.
changing LNG technologies. It is also emissions and for ensuring the countries normally meet twice a
collaborating with the Transmission introduction of renewable gases; year with members taking turns to
Committee on two T&I sessions Innovations in gas transmission host the gatherings, but the global
looking at the implementation of networks: a booster for the flexibility pandemic has put a temporary
cutting-edge technologies for: of energy markets; and IoT and AI: stop to this. The last physical
Digitisation; and Mixing gases. The two allies to optimise risks and meetings were of Task Force 2 in
For its part, the Transmission costs in gas transmission networks. Bonn, Germany, February 10-12,
Committee is responsible for three Task Force 2 – Energy for All is and of the Strategy Committee in
II sessions looking at: Advances in responsible for two II sessions asking Tel Aviv, Israel, February 26-28.
the reduction of greenhouse gas the questions: Who will facilitate and Since then there have been several
(GHG) emissions and in transporting fund energy access? Energy access – online meetings.
renewable gases in transmission Where can gas be the solution? For any further information please
systems; Gas transmission networks For the Plenaries, Current Debate contact the Deputy Manager of the
to enhance the vitality of energy sessions and Luncheon Addresses, the Korea Presidency Team, Ms Seyoung
markets; and Social value creation for Coordination Committee working with Ha (syha@wgc2021.kr) or me directly
transmission system operators and the Presidency has selected the topics (jwkhang@wgc2021.kr).
stakeholders. It is also responsible for and is inviting high-level speakers.
three T&I sessions: The development The committees and task forces Jeongwook Khang is the Chair of IGU’s
of technologies for minimising GHG with a membership of 897 from 49 Coordination Committee.
Update on IGU’s current work programme 13Meeting the world’s energy demands Qatargas provides quality LNG and other hydrocarbon products to the global market safely and reliably. We operate 14 mega LNG trains with a total production capacity of 77 million tonnes per annum, two of the world’s largest condensate refineries, two sales gas facilities, two helium plants, and a chartered fleet of 70 LNG vessels. Through efficient and reliable operations, commitment to our customers and the environment, we supply cleaner energy to the world. The World’s Premier LNG Company www.qatargas.com
Features
This issue’s features section starts with a report on the
impact of Coronavirus on gas markets in Latin America
and the Caribbean. Next up are two hydrogen articles,
the first looking at ways of producing hydrogen from
natural gas and the second at the roll-out of hydrogen
in Korea. Then we have a report from Portugal on a
smart gas metering pilot project and an article looking
at LNG as a marine fuel.
17A better world
With natural gas as the world’s cleanest
and most efcient fossil fuel, Oman
LNG’s operations near the Omani city of
Sur, is helping to make for a better world.
Since starting production in 2000, we
have delivered over 2,300 cargoes to
customers, remaining a reliable supplier
of liqueed natural gas that is helping to
reduce carbon emissions and preserve
the earth’s natural environment for fu-
ture generations to enjoy.
For centuries, this beautiful coast-
bound nation of Oman was a trade
centre connecting different parts of the
world through vibrant and ourishing
commerce relations. Trade that suppor-
ted lives in far lands. At Oman LNG, we
continue that tradition of seafarers and
commerce through bringing energy to
many corners of the world.
Oman Liqueed Natural Gas LLC (Oman
LNG) is a joint venture company estab-
lished by a Royal Decree in 1994 operat-
ing under the laws of the Sultanate of
Oman. The company engages in the busi-
ness of producing and selling liqueed
natural gas (LNG), and its by-product, nat-
ural gas liquids (NGLs) and operates three
liquefaction trains at its plant in Qalhat, serve in Ras al Jinz in the eastern region stimulating local business ventures by
South Sharqiyah Governorate. of the country boasting one of the enabling Small Medium Enterprises
world’s largest breeding beaches for (SMEs), a major cornerstone of Oman’s
Hand-in-hand with our operations Greenback Turtles. economy, to ourish and providing
comes a strong health, safety and en- equal opportunities to compete for all
vironment performance. Our recent As a company our responsibility to our service contracts.
achievement of over 30 million man- staff, contractors and the community is
hours without a Lost-Time Injury (LTI) is to provide a safe environment so that The company is a corporate and social re-
testament to our HSE excellence, and they can come to work and return sponsible organisation by maximising
an exemplary diligence and commit- home to their families, safely every day. benets to the employees, stakeholders
ment to the safety of our people, envir- and community and has a well-designed
onment, and communities where we Through our empowerment philo- alignment between sustainable social
operate. Our processes meet the sophy, we continue to develop talent development and the business.
highest of ISO standards, which we are and help remove barriers to reach suc-
proud to maintain every year and our cess. Our aim is to develop all staff to From powering large industries, to
ceaseless efforts to support the envir- their fullest potential. We support in- keeping homes warm and the lights
onment through the sponsoring of country value through focused efforts on, Oman LNG is your reliable energy
various initiatives such as the Turtle Re- towards developing local talent and partner.pany’s social investment programmes development plans implemented in
Perpetual sustainable have spanned the length and breadth the Sultanate.
investments in the society of the country with thousands of pro-
of Oman jects ranging from healthcare and edu- Oman LNG Development Foundation
cation to preserving the environment supports Oman LNG’s ambitious vis-
Corporate Social Responsibility (CSR) and road safety; reecting its sincere ion and dedication towards CSR. The
has been an integral part of Oman LNG interest to embed the principles of so- Foundation champions private sector
with a focused objective: to deliver tan- cial responsibility as part of its core ex- contribution to the development of
gible value to Oman and its people istence. Through strengthening the Oman and its people, through CSR
through social investment by capital- cooperation between the public and and citizenship, as an active contrib-
ising on the country’s natural gas re- private sector, the projects and pro- utor to social and societal welfare,
source. The company allocates annually grammes aim to supplement the and through proactively addressing
1.5% net income after tax (NIAT) to vari- national economy and ambitious community needs.
ous social investment and sustainable
programmes; a commitment set when
the company was founded. In addition,
before the rst cargoes left the LNG
plant, the company invested in sustain-
able development projects for the com-
munity which speaks volumes about the
company’s business principles; that
Oman LNG’s initial investment in social
development began even before the
production line was fully functional.
Today, Oman LNG’s CSR programmes,
delivered through Oman LNG Develop-
ment Foundation, span the entire na-
tion and contribute to the socio-
economic development of the country.
Over the past nineteen years, the com- omanlng.com oman-lng-l-l-c- @OmanLNG Oman LNG omanlngllcF EATURES
The mixed impacts of
coronavirus on the Latin
American gas markets
In the run-up to the virtual Latin America and Caribbean Gas Conference in February 2021, and a pre-event on
November 26, organised by EnergyNet in partnership with IGU and supported by OLADE and ARPEL, this Wood
Mackenzie report looks at recent developments. By Mauro Chavez and Rodrigo Rosas
Latin America and the Caribbean is closely to industry development, and measures tightened to contain the
one of the regions that have been hit so, industrial gas demand. With con spread of the coronavirus, the severity
harder by the coronavirus disease (see tinuous GDP growth since 2005, indus of economic impacts deepened while
Figure 1). The pandemic affected Latin trial gas demand had always moved in also eroding energy needs.
America at a time of economic weak the same direction – including the Demand-side impacts are already
ness and macroeconomic vulnerability. period between 2007-2009 when both visible. The coronavirus pandemic has
The mix of external and domestic declined due to the global financial taken its toll over industrial activity
factors could pose challenges for the crisis and the swine flu pandemic. and the whole market, reducing
development of the gas and power Once again, history repeats itself. energy needs significantly. In April,
industries in the region. Since 2019, GDP growth has slowed we observed a 6.1% decline in elec
due to political and regulatory tricity demand year-over-year, while
Mexico uncertainties causing turmoil in the gas decreased by 10% compared to
Gas markets have suffered as industrial Mexican economy. Before the corona the previous month.
activity has stalled in the last months. virus crisis, we estimated Mexico’s eco According to Wood Mackenzie’s
For Mexico, Covid-19 impacts are evi nomic activity would regain momen analysis, a 5% decline year-over-year
dent. Mexico’s GDP expansion is tied tum in 2020. But, as social distancing in domestic gas demand can be
expected, affecting the two engines
of growth; the industrial and power
GDP growth in Latin America 1990-2020 sectors (see Figure 2). However, a
15%
glimmer of hope remains on the
GDP growth (%)
10% horizon. While the country is facing
5% new regulatory changes impacting
0 renewable energy investments, gas-
-5% based capacity remains the base-
-10% load technology.
-15% Just in 2020, close to 3 GW of
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
flexible and highly efficient combined-
Latin America & Caribbean Mexico Brazil Argentina cycle plants are scheduled to start
operations, which follows several new
Figure 1.
20 The mixed impacts of coronavirus on the Latin American gas marketsF EATURES
supply below our previous forecast
Mexico gas demand forecast until the 2040s, featuring a material
8 price premium for Henry Hub. These
bcf/d
7 effects quickly cascade down to
6
5
Mexico, pressuring prices upward.
4 We anticipate a national average of
3
US$3.8/mmbtu in 2021-2025, an
2
1 increase of 53% from current levels.
0
2015 2016 2017 2018 2019 2020
Power RCA* Industrial Oil & Gas** Pre-coronavirus forecast
Brazil and Bolivia
* RCA = Residential, commercial and agriculture **Oil & Gas excludes Pemex E&P demand Brazil is one of the countries that
suffered the most in terms of gas
Figure 2. demand reduction (see Figure 3).
large combined-cycle plants in 2019 per day on average by year-end, Due to this gas demand reduction,
as well. Although no material growth despite the fact that Permian gas Petrobras had to force thermal power
in gas demand for 2020 awaits, over production is 13% lower from March operation to maintain the minimum
the long term, we remain confident peak levels after a series of shut-in feed gas volumes required to ensure
the market will continue to grow at wells. Looking ahead, US piped imports the integrity of its upstream produc
2% (compound annual growth rate) remain as the primary supply source, tion. This came along with a set of
throughout 2040. increasing by 42% in 2030, reaching force-majeure claims, including the
Pipeline imports from the United the 7.3 bcf (204 mcm) per day mark. sole longstanding import agreement
States saw a significant decrease in Following an unprecedented oil between state-owned companies
April, following the pandemic effects. market collapse, North American Petrobras and Bolivia’s YPFB.
Our pre-coronavirus forecast consi associated gas supply has been sharply April 2020 was extremely difficult
dered 5.4 bcf (151 mcm) per day from hit. Even as oil prices recover, we for Bolivia’s gas market, as Brazil’s
pipeline imports, but as mentioned expect a lower rig-to-price relationship, offtake hit a record low of 10 mcm/d,
before, the economy took a heavy meaning a North American associated and Argentina was importing just 10.5
blow. Economic activity decreased
by 17.3%, while imports fell by 14%
(4.6 bcf or 129 mcm per day) month- Demand gas reduction in Brazil due to coronavirus crisis
76.0
over-month. 80
Mcm/d
70 0.2 66.0
However, recovery in gas flows -3.2
60 -7.0
54.4
is already visible, as the lockdown Difference in demand Feb-Mar -7.5
50 -3.3 -0.8
measures began to be eased in early 40
Difference in demand Mar-Apr
June. With the completion of the 30
Wahalajara corridor – a pipeline linking 20
10
the Waha play in the USA’s Permian
0
basin with Guadalajara in Mexico – February 2020 March 2020 April 2020
in mid-2020, we estimate pipeline Power sector Fertiliser Refinery Local distribution companies (LDCs)
imports to recover to 5.2 bcf (146 mcm)
Figure 3.
The mixed impacts of coronavirus on the Latin American gas markets 21F EATURES mcm/d. And on top of that, domestic reform in Brazil, as Petrobras currently economy was struggling. The govern demand fell to to 7 mcm/d, and on controls 100% of transport capacity, ment at the time capped prices to end- some weekends 4 mcm/d. This created which avoids commercialisation bet users in an attempt to support the an issue to manage reservoir integrity ween independent pre-salt producers economy. However, price regulation for non-associated gas fields. and local distribution companies, proved uneconomical for producers, Gas consumption in the power thermal power plants and industries. and upstream investment stalled, sector will be the most affected in At the writing of this report, the causing supply to go into decline. the long-term. In recent years, Latin Congress has approved the vote of the The drop in production eventually America held a set of auctions for New Gas Law, which will provide legal created supply shortfalls, and ulti renewable projects that resulted in background for new gas transport mately the government introduced gas a capacity expansion for electricity agreements using the entry-exit tariff price subsidy regimes from 2013 to using demand forecasts based on system. This was not encompassed by resuscitate the country’s exploration high GDP performance. Therefore, the the 2009 Gas Law. and production sector. oversupply of renewables has become Coronavirus and the oil price crash Argentina appears to be reviving more critical with electricity demand have also resulted in major capex this approach. The new administration destruction in the medium-term, and investment cuts in the region. Wood is introducing intervention to cap gas this will result in low utilisation factors Mackenzie’s upstream team estimates a prices to support the country’s strugg of thermal power plants and limited capital spend down by 39% in 2020 in ling economy. As history has shown us, opportunities for thermal power Latin America compared to pre-crash there will be a supply decline response. auctions in South America. levels; and the countries most affected Unlike before, these days 40% of Brazil continues to attract M&A are Venezuela, Brazil and Argentina. production is from steep-declining investments, as Petrobras is executing unconventional fields. This indicates according to schedule its commitments Argentina that supply shortfalls will be steep and to divest gas transport and distribution In the case of Argentina, on top of the swift. Having ended the contract for assets in Brazil. Over this year, Petrobras macroeconomic and coronavirus crisis, one of its two floating storage and is selling its 51% participation in the new administration started gas regasification units (FSRUs) in 2018, Gasbol, 10% participation in NTS, the price control measures. To maintain the country is now likely to need to transport company of the southeast low gas prices for end-users, the new bring back an FSRU as soon as next of Brazil, and 51% in Gaspetro, the administration has imposed a tariff year, and LNG imports are likely to rise holding that owns 19 local distribution freeze until the end of 2020. over US$0.7 billion by 2022 from companies across Brazil. In July, it Enargas, the national gas regu- US$0.4 billion in 2019. As LNG imports concluded the sale of its remaining latory agency, uses an exchange rate are paid by the Argentinian state 10% of the gas pipeline company TAG of ARS$42/US$1 for gas prices to regu energy company, IEASA, with transfers to the consortium Engie and CDPQ, lated users when nowadays the from the national treasury, this could a Canadian institutional investor. exchange rate is over ARS$70/US$1. add more stress to Argentina’s capacity In 2020, it was expected that there In addition to this, Enargas has not to pay external debt. would be a public call to tender trans revised its transportation and port capacity for NTS and TAG, but this distribution tariffs since April last year. Chile is likely to be postponed to 2021. This Argentina has been in a similar For Chile’s gas market, the sharp is pivotal for the desired gas market situation before. In 2002, the country’s decline in Argentina’s domestic 22 The mixed impacts of coronavirus on the Latin American gas markets
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see the start of LNG
imports by the end
of 2021. Work has
started on a regasi
fication module that
will be installed
onboard the BW
Tatiana (formerly the
Shell tanker Gallina)
which is being
converted into an
FSRU by BW LNG.
production will compromise gas and the Dominican Republic report from oil-fired generation to decrease
piped imports. Fortunately for the an increase in LNG imports. However, its exposure to price volatility, reduce
Chilean buyers, this is happening we expect LNG imports to decrease generation costs and comply with
in a record low LNG price environ- by 4% from our pre-coronavirus environmental policies.
ment, so importing LNG is at rela- forecast for both islands.
tively little incremental cost to The pandemic effects leave our Mauro Chavez is a Principal Analyst and
Argentinian pipeline imports. And view in the Caribbean relatively Rodrigo Rosas is a Senior Analyst both
Chile could increase its LNG imports unchanged over the next years, given covering Latin America gas and LNG at
to support its coal decommission- the significant efforts to shift away Wood Mackenzie (www.woodmac.com).
ing programme.
Caribbean LNG imports in Latin America and the Caribbean 2013-2020
In the Caribbean, there are mixed 18
mmtpa
stories. In Puerto Rico, the biggest 16 Puerto Rico
14 Panama
LNG market in the region shows a
12 Mexico
notable decrease in LNG imports Jamaica
10
due to the combined impact of the Dominican Republic
8
Colombia
earthquake in early January and 6 Chile
coronavirus. According to the US 4 Brazil
Argentina
Department of Energy, between 2
January and April, the island received 0
2013 2014 2015 2016 2017 2018 2019 2020
8.274 bcf (232 mcm), a 60% decline
Note: El Salvador and Nicaragua are expected to start LNG imports by the end of 2021.
year-over-year. In contrast, Jamaica
Figure 4.
24 The mixed impacts of coronavirus on the Latin American gas marketsF EATURES
Cost-effective and clean ways
of producing hydrogen from
natural gas
Hydrogen has an important role to play in meeting climate targets and can be produced from natural
gas with zero greenhouse gas emissions. Here we look at developments that can be applied in the EU.
By Alexander Ishkov, Konstantin Romanov, Roman Teterevlev and Maximilian Kuhn
The step-by-step decarbonisation as studies consistently indicate that of natural gas, which produces in the
of the EU’s energy system based on hydrogen produced from water by order of 9 kg of CO2e per kg of hydro
expanding the use of natural gas, using electrolysis using renewable energy gen. However, the proposed carbon
methane-hydrogen blends and pro will be significantly more expensive intensity target is half this which
ducing hydrogen from natural gas can than low- and zero-carbon hydrogen means that the continued use of con
reduce greenhouse gas emissions produced from natural gas, certainly ventional steam methane reforming
(GHG) by up to three-quarters. up to 2050 and probably beyond. This (SMR) would require a substantial
Indeed, the long-term potential of is because water electrolysis is highly scaling up of carbon capture, use
natural gas lies in the possibility of energy intensive, requiring between and storage technologies (CCUS).
producing CO2 emissions-free hydro 48 and 77.5 kWhel per kg of hydrogen
gen from methane. This will be vital produced (based on published data). Methane pyrolysis
for the EU to achieve its objective of a Currently, hydrogen is most com An alternative and highly promising
cost-effective decarbonisation policy, monly produced via steam reforming hydrogen production method is
methane pyrolysis which decomposes
methane into hydrogen and solid car
Methane pyrolysis has significant potential to create bon in the absence of oxygen and, thus,
new market opportunities
without direct CO2 emissions. A high
temperature above 1,000ºC is neces
METHANE PYROLYSIS
4 1 Low carbon sary for the thermal decomposition.
GAS THERMAL PYROLYSIS
CATALYTIC PYROLYSIS
Н
hydrogen
Cost effective The use of a catalyst helps to increase
the reaction rate and thus reduces the
1.008
The EU reaction temperature. Different tech
PLASMA PYROLYSIS 6 market nology routes are based on methane
Grid / RES
MOLTEN MEDIA
PYROLYSIS
C
carbon Environmentally
pyrolysis including thermal, catalytic
(as well as thermo-catalytic), plasma
12.011 friendly and molten-media processes.
Major EU companies and institutes
Note: Hydrogen atomic number 1 and atomic mass 1.008; Carbon atomic number 6 and atomic mass 12.011.
such as BASF, the Institute for Advanced
Sustainability Studies (IASS), the
26 Cost-effective and clean ways of producing hydrogen from natural gasF EATURES
readiness levels are based on a scale
from 1 to 9 with 9 being the most
mature technology.)
The energy required for the
pyrolysis reaction can be provided by
grid or renewable electricity, natural
gas feedstock or hydrogen produced
as part of the process. The electricity
consumption for methane pyrolysis
is estimated at up to 20 kWh per kg
of hydrogen.
Uses of solid carbon
Solid carbon is a valuable material for
the industrial and building sectors as
Karlsruhe Institute of Technology (KIT), catalytic methane pyrolysis. Russian well as in electrical engineering and
Linde and Thyssenkrupp have focused companies such as Gazprom are inv electronics, which allows for an overall
on a thermal decomposition process estigating plasma methane pyrolysis. optimisation of production costs.
and molten metal systems. Monolith in The technological maturity of methane Carbon black is used as a reinforcing
the USA is pursuing plasma technology pyrolysis processes is estimated to be filler in the manufacture of car tyres
and the Australian Hazer Process uses in the range of TRL 4-8. (Technological and also as a pigment in plastics,
z As well as
hydrogen, methane
pyrolysis produces
high-purity, granular
carbon.
v BASF is one of the
companies experi
menting with methane
pyrolysis in special
laboratories and it is
working to implement
the process on a
pilot scale
Cost-effective and clean ways of producing hydrogen from natural gas 27F EATURES
c Carbon nanotube
filaments, called
yarn, can be com
bined with carbon
fibre to make
toughened braided
textiles. The strong,
lightweight material
is cured with a
polymer matrix to
strengthen compo
sites for aircraft
applications like fan
blades and fuselage
components.
printing inks and paints. Other uses of carbon. Carbon fibres are used as part technologies is that these technologies
carbon black include as an ultraviolet of composite materials. Graphene is a can potentially use methane from any
(UV) stabiliser in plastic pipes and in relatively new material known for its source, including biomass, industrial
electronics. To facilitate handling, car high strength and conductivity with and animal waste as well as sewage,
bon can be formed into pellets. Carbon applications in the aerospace and and can be an important part of the
is non-toxic should components leach automotive sectors, for wind turbines EU’s future circular economy. In
out or release into groundwater when and in construction. Possible appli addition, they can be used in the
stored underground. cations include semiconductors, regions where CCUS is unavailable thus
Another solid carbon product, batteries and electronics. Nanotube expanding the opportunities for low-
synthetic graphite, can be used as an carbon is used in polymers, plastics and zero-carbon hydrogen production
anode in lithium-ion batteries, which and batteries. in the EU. Unlike gaseous CO2, solid
are used in portable electronic devices The utilisation for soil improvement carbon is easy to store and is non-toxic.
such as smart phones, cordless devices with positive environmental effects
or power tools and electric vehicles. (long-term carbon soil sequestration) Economic and emissions benefits
Synthetic graphite can also be used is another market for solid carbon. Perhaps most importantly, hydrogen
as an electrode in steel production in The production of solid carbon as produced from natural gas via methane
electric arc furnaces or as a refractory a part of the hydrogen production pyrolysis can have truly zero and even
(heat-resistant material) in furnaces process will therefore not only reduce negative emissions. These hydrogen
and crucibles. GHG emissions but will also create new technologies produce no direct СО2
Other carbon products include market opportunities. Another compe emissions, and their indirect emissions
graphene, carbon fibres and nanotube titive advantage of methane pyrolysis depend on the carbon footprint of
28 Cost-effective and clean ways of producing hydrogen from natural gasF EATURES
natural gas and electricity used to of hydrogen) and steam reforming developing hydrogen energy in the
power the process. ($1.03-$2.16 per kg of hydrogen). EU. A step-by-step decarbonisation
Technologically driven minimal of the EU economy based on the use
fugitive methane emissions from Technology neutrality of methane-hydrogen fuel and later
properly sourced and transported In the light of these facts, when realis hydrogen could ensure the cost-
natural gas, objectively verified, could ing the EU’s Hydrogen Strategy, it is effective achievement of the EU’s
be potentially offset through important that the technology neutral climate goals for 2030 and 2050 while
compensatory measures (for example, ity principle is upheld. Life cycles using existing gas infrastructure for
[re-]forestation). And where renewable embracing all sustainable development natural gas supplies as a feedstock for
electricity is used, the carbon intensity criteria and externalities – including hydrogen production.
of the process is substantially reduced. but not limited to GHG emissions –
The carbon intensity of hydrogen need to be fully taken into account. Professor Alexander Ishkov is Deputy
produced by plasma methane pyrolysis Implementing discriminatory Head of Gazprom’s Strategy Department
is estimated at 1.2-1.6 kg of CO2e per mechanisms aimed against hydrogen – Head of Directorate and a Doctor in
kg of hydrogen (taking into account produced from natural gas in compli Chemistry. Dr Konstantin Romanov is
the transportation of gas via Nord ance with carbon intensity require Head of Division at Gazprom’s Strategy
Stream and the use of renewable ments could result in a cost-inefficient Department and a member of IGU’s
power – wind, solar). Thus, the decarbonisation policy in the EU and Distribution Committee. Roman
hydrogen produced by methane even might lead to an increase in Teterevlev is Deputy Head of Division at
pyrolysis corresponds to “low-carbon GHG emissions. Gazprom’s Strategy Department and a
hydrogen” in accordance with the It therefore makes sense to exploit member of IGU’s Strategy Committee.
published EU Hydrogen Strategy. the ecological, economic and techno Dr Maximilian Kuhn works in Group
By way of comparison, the figures logical advantages of natural gas while Relations (GR/PR) at Gazprom Germania.
for electrolysis (wind, solar) stand at
0.6-3.7 kg of CO2e per kg of hydrogen
(the assessment takes into account
the following stages: the construction
of units, supplies of feedstock,
direct emissions).
Furthermore, and pending further
research into using sea water, scaling
up water electrolysis technology in the
EU would require significant quantities
of pure water.
Methane pyrolysis also offers advan
tages from an economic point of view.
With hydrogen production costs of
$1.36-$1.79 per kg currently forecast in
the literature, pyrolysis is competitive
with electrolysis ($4.61-$14.87 per kg A researcher examines a wafer with carbon nanotubes.
Cost-effective and clean ways of producing hydrogen from natural gas 29Green gas deployment
Naturgy promotes the generation of renewable natural gas in Spain, a booming green fuel
that is part of decarbonisation, contributing to the fight against climate change and is also
part of the future Circular Economy.
The gas industry, like the rest of the the system and, specifically, in France pursue an important number of initiatives
productive sectors in Spain, is placing it is expected that by 2050 all gas will related to the various forms of RNG,
increased emphasis on their environ- be renewable”, points out the Spanish investigating: the upgrading of biogas,
mental performance and strategy. In this Gas Association (Sedigas). generated from waste products or crops to
respect, it is striking to see how the gas Sedigas believes that half of the produce biomethane; and the gasification
sector has been promoting numerous domestic demand for gas in Spain of biomass, crops and or residuals to
renewable natural gas generation activities could be covered by 2030 with renew- produce renewable synthetic gas that is
and projects over recent years, a new able gas given the volume of existing then treated to produce Bio-SNG.
green fuel that is expected to displace waste products. In 2019 Nedgia (the gas distribution
a considerable part of natural gas This potential volume of renewable subsidiary of the Naturgy group) injected
consumption in the future. gas production could be equivalent to renewable natural gas (biomethane) for
The increase in the use of renewable a quarter of the current demand for the first time in its distribution network.
natural gas can lead to a significant gas in Spain in the most conservative It was RNG produced from the upgrading
reduction in greenhouse gas emissions case, and even “up to 65% of the current of biogas that is generated in the treat
when it is injected into the natural gas demand for natural gas provided that its ment of waste water sludges in the Waste
distribution network or used as fuel in development is promoted decisively and Water Treatment Plant (WWTP) in
the transport sector. According to many without longer delay”, as explained by Butarque, Madrid. The facility, operated
experts it is expected that this energy the experts Xavier Flotats and Álvaro by Nedgia, is part of the activities of the
will contribute significantly to the Feliu, authors of the report “Los gases European ECO-GATE consortium project
decarbonisation of the gas sector in renovables. An emerging energy vector”, to promote sustainable mobility that is
coming years. published by the Naturgy Foundation in cofinanced by the European Union
European countries such as Germany, June 2019. through the CEF-Transport programme.
the United Kingdom, Denmark or Another representative projets being
Sweden are leading the way in the Naturgy, in the lead carried out by the company is called
development of this new energy vector Naturgy has been working for several Unidad Mixta de Gas Natural Renovable
with a large number of biomethane years on promoting RNG in Spain. in Spanish. This project is a joint initiative
production plants already in operation, The company’s activities have focused being carried out by Naturgy and the
while in countries such as France, Italy, on the realisation of pilot projects to technology centre Energylab located
and the Netherlands there are already investigate RNG production with the in Vigo, Spain with the Bens WWTP
measures in place promoting the develop final ambition to maximise yields while located in A Coruña, north-west Spain.
ment of these plants. “In Europe there are reducing production costs. The company The principal aim of the project is to
700 plants injecting renewable gas into has participated in and continues to investigate various new technologies
to obtain improvements in the production
of biogas, biomethane and in the
development of a novel bio-methanisation
concept. The project is financed by the
European Union within the framework of
Programa Operativo FEDER Galicia 2014-
2020. The biomethane produced so far
has served to fuel an interurban bus in
the A Coruña area and three operating
vehicles from the plant, together making
journeys of 135,000 km. In total, this
small research project led to a reduction in
emissions of around 6,000 tonnes of CO2
A bus in Galicia (Spain) fuelled by RNG. in 2019.Helping the planet means investing in the environment. That’s why we’ve invested over 1.4 billion euros in renewables over the last 3 years, thereby supplying 3 million homes with energy from the wind, water and sun. naturgy.com
F EATURES
The roll-out of hydrogen
in Korea
Hydrogen has a major role to play in decarbonisation around the world but Korea is so far
the only country to have enacted a hydrogen law. By Yoon Namgoong
With the drive to combat climate the Hydrogen Law on January 9, 2020 of the by-product hydrogen was used
change, moves to transition from the provided a legal basis and a much- outside the complexes being supplied
carbon economy to a hydrogen eco needed driving force to usher in the via pipelines totalling 200 km in length
nomy are picking up pace around the hydrogen economy. (280,000 tons) and 540 tube trailers
world. Many countries are developing At present, major advanced coun (20,000 tons).
policies to grow the hydrogen energy tries such as Japan, the US and mem In terms of utilisation, Hyundai
market and Korea is no exception, bers of the EU are pushing ahead with Motor has emerged as a world leader
seeing hydrogen as a new engine for various policies to foster the use of in hydrogen fuel cell technology by
economic growth with a key role to hydrogen, but Korea is the only coun launching the world’s first mass-
play in the country’s shift to a low- try that has enacted a law to underpin production fuel cell electric vehicle
carbon economy over the long term. the systematic and effective develop (FCEV), Tucson ix, in 2013. The total
The Korean government released a ment of the hydrogen economy. number of FCEVs jumped to 5,083 in
roadmap for ramping up the hydrogen 2019, which is 5.7 times higher com
economy on January 17, 2019. Subse Current status of Korea’s hydrogen pared to 2018, served by 34 hydrogen
quently, it announced follow-up plans industry refuelling stations (see Table 1). Keeping
to build hydrogen infrastructure and In 2019, Korea’s hydrogen production up the pace, the Korean government
refuelling stations (October 22, 2019) reached about 2 million tons, out of plans to have 10,280 FCEVs including
along with a hydrogen technology which 70% was by-product hydrogen buses in operation by the end of 2020.
development roadmap (October 31, generated from the petroleum refining As of 2019, there were 3,208 fuel
2019) and comprehensive measures for process, mainly from three large-scale cells installed in Korea for power gen
safety management (December 16, petrochemical complexes in Ulsan, eration and residential use. Of these,
2019). Most notably, the enactment of Yeosu and Daesan. About 300,000 tons 41 fuel cells for power generation have
a total capacity of 308 MW and 3,167
fuel cells for residential use have a total
Fuel cell electric vehicles and refuelling stations in Korea capacity of 7 MW. Fuel cells for power
Actual Projection generation are more advanced in
Year 2017 2018 2019 2022 2040
terms of capacity and technology than
Production 177 891 5,083 81,000 6,200,000
of FCEVs (67,000 for domestic use (2,900,000 domestic fuel cells for residential use.
and 14,000 for export) and 3,300,000 export) In terms of hydrogen production,
Hydrogen 12 14 34 310 1,200
Korea obtains abundant by-product
refuelling
stations hydrogen, but the country is still in its
infancy when it comes to hydrogen
Table 1.
32 The roll-out of hydrogen in KoreaF EATURES
production technology, especially
related to natural gas reforming and Korea’s hydrogen supply
water electrolysis on a large scale. Year 2018 2022 2030 2040
Supply 130,000 470,000 1.94 million 5.26 million
Currently, hydrogen is transported
(=demand) tons/ year tons/year tons/year tons/year
by tube trailers and low pressure Means of
① By-production ① By-production ① By-production ① By-production
pipelines, which means that there is a supply
hydrogen hydrogen hydrogen hydrogen
② Hydrogen ② Hydrogen ② Hydrogen ② Hydrogen
need to develop high pressure pipe from SMR from SMR from SMR from SMR
lines and liquefaction facilities. An ③ Water ③ Water ③ Water
electrolysis electrolysis electrolysis
evaluation of the competiveness of ④ Production ④ Production
Korea’s hydrogen industry is shown abroad abroad
* ①+③+④=50%, * ①+③+④=70%,
in Table 2. ②=50% ②=30%
Price – 6,000 KRW/kg 4,000 KRW/kg 3,000 KRW/kg
Korea’s hydrogen economy Note: SMR = Steam methane reforming.
Source: Ministry of Trade, Industry and Energy, Hydrogen Economy Roadmap of Korea, January 2019.
roadmap
In January 2019, the Korean govern Table 3.
ment announced an ambitious fuel becoming a leading hydrogen of hydrogen and 6.2 million FCEVs
cell initiative entitled “Hydrogen economy by 2040. (3.3 million for export and 2.9 million for
Economy Roadmap of Korea”. The The government’s aim is to reach an domestic use, the latter served by 1,200
roadmap sets out Korea’s vision of annual production of 5.26 million tons hydrogen refuelling stations) by 2040.
The government also aims to increase
the combined capacity of fuel cells for
Competitiveness evaluation of Korea’s hydrogen industry
power generation to 15 GW (domestic,
Classification Competitiveness 8 GW and export, 7 GW) by 2040.
Supply Hydrogen By-production hydrogen High
In 2040, 70% of the total hydrogen
side production Natural gas reforming with carbon Low
capture and storage production is forecast to come from
Electrolysis on a large scale Low
by-product hydrogen together with
Hydrogen Low pressure piping Moderate
storage and Tube trailers Moderate water electrolysis and overseas pro
transportation High pressure piping and composite Low duction, and hydrogen reformed from
container
Liquefaction and transportation Low natural gas will account for the remain
Hydrogen Installation cost Moderate ing 30% (see Table 3). According to the
charging The number of installed stations Moderate
roadmap, Korea will focus on improv
Demand Residential use The number of distributed products Low
side (fuel cells) The competitiveness of companies and Moderate ing the scalability of hydrogen produc
related technology
tion and enable hydrogen mass pro
Power generation The number of distributed products High
(fuel cells) and capacity duction by developing water electrolysis
The competitiveness of companies and High technology in conjunction with solar
related technology
and wind power generation by 2022.
Transport use The number of distributed FCEVs High
(fuel cells) The competitiveness of Hyundai Motor High The Korean government also plans to
and related technology
establish overseas hydrogen production
Hydrogen-fired The competitiveness of companies and Low
gas turbines related technology bases and import hydrogen for
domestic uses.
Table 2.
The roll-out of hydrogen in Korea 33F EATURES
Under this roadmap, KOGAS
plans to build 25 hydrogen-producing
facilities and operate 500 tube trailers
and pipelines totalling 700 km in
length to deliver hydrogen produced
c Hyundai Motor’s at the facilities by 2030. KOGAS aims to
second-generation build 100 hydrogen refuelling stations
fuel cell electric
vehicle, the NEXO by 2022 through HyNet, a public-
introduced in 2018, private special purpose company.
offers more power
and has a lighter
To implement the roadmap up to 2030,
powertrain. KOGAS has set aside a budget of
4.7 trillion KRW ($4.01 billion).
For hydrogen transportation, in an attempt to facilitate the govern
addition to the existing tube trailers, ment’s strong drive towards the CO2 reduction by ushering in the
Korea will lay out a nation-wide hydro hydrogen economy. KOGAS plans to hydrogen economy
gen pipeline network in the long term. supply hydrogen to refuelling stations In compliance with the 2015 Paris
The target price for hydrogen by 2040 is to the tune of 100% of the demand for Climate Agreement, the Korean
3,000 KRW/kg ($2.42/kg), and hydrogen FCEVs, and just under 60% of the government decided in December
will be supplied at the same price across demand for fuel cells and mixed power 2016 to cut greenhouse gas emissions
the country, regardless of distance. generation. Specifically, out of the by 37% from its business-as-usual level
Korean government’s 2040 supply (BAU: 851 million tons CO2-equivalent)
Hydrogen industry promotion target of 5.26 million tons, KOGAS by 2030 (domestic 25.7%, overseas
roadmap of KOGAS plans to supply 3.45 million tons or reduction 11.3%). However, in July
KOGAS released its “Hydrogen Industry 66% of the national hydrogen demand 2018, the government announced a
Promotion Roadmap” in April 2019 in (see Table 4). revised plan that lowered its overseas
c Table 4.
Hydrogen industry promotion roadmap of KOGAS
2022 2030 2040
Mobility
Government FCEVs 81,000 2,284,000 6,200,000
(67,000 domestic) (108,000 domestic) (2,900,000 domestic)
Domestic demand (tons) 29,150 469,500 1,014,500
KOGAS Proportion (%) 100 100 100
Supply (tons) 29,150 469,500 1,014,500
Fuel cells Government Power generation (GW) 1.5 (1 domestic) 5 (2.5 domestic) 15 (8 domestic)
Residential use (MW) 50 1,000 2,100
Domestic demand (tons) 441,000 1,470,000 4,242,000
KOGAS Power generation (tons) 420,000 1,050,000 2,000,460
Residential use (tons) 21,000 210,000 441,000
Proportion (%) 100 85.71 57.55
Supply (tons) 441,000 1,260,000 2,441,460
Source: KOGAS, Hydrogen Industry Promotion Roadmap, April 2019.
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