The outlook for LNG How are the dynamics changing Betsy Spomer Barcelona 10 December 2008
Overview The outlook for LNG how are the dynamics changing Commodity prices Markets Supply demand Unconventional gas 3
Industry context Global LNG context December 2008 A globalizing industry Spare infrastructure, new markets, trade flexibility An evolving industry FSRUs FLNG Large-scale and small-scale projects Unconventional gas North America…
Industry context Atlantic to Pacific trade flows Over 14 million tonnes imported Atlantic to Pacific Basin into Asia from the Atlantic Basin trade by supplier 14 Nearly a 100% increase over 12 2007 10 Norway TT mtpa 8…
Industry context Near-term outlook (2009 2012) Industry is about to Effective supply capacity by region experience a supply surge 300 How will new volumes be 250 West Africa allocated South America 200 Traditional JKT & China…
Industry context Global LNG price spread 25 UK (NBP) US (HH) 20 Japan (JCC) Europe (EBP) /mmBtu 15 10 6.18/mmBtu (Nov Average) 5 0 2002 2003 2004 2005 2006 2007 2008 Data: JCC…
Industry context Industry cost base Material costs following Price index commodity prices (2000 = 100) downward 700 Carbon Steel (2002=100) How does this play 600 SS Steel (2002=100) July 2008 through into project 500 Nickel…
Industry context US shale gas An increasingly important source of North American gas supply 9
Industry context LNG importing countries new markets Germany Holland Denmark UK Lithuania Ireland Poland Canada Belgium Croatia Romania France Ukraine S. Korea Portugal Turkey Italy Israel Japan US Canary Is. (Sp) Spain…
Industry context New markets our experience Quintero LNG Chile BG Group selected as supplier (1.7 mtpa) Terminal start (Q2 2009) Singapore BG Group selected as supply aggregator Santiago Chile (April 2008) First 3 mtpa (starting…
Supply demand Longer term outlook (to 2020) 500 Speculative Future growth Possible uncertainty Develop- 400 Probable ment Under Construction delay Existing mtpa 300 Project start-up slippage Costs 200 Partner…
Supply demand Longer term outlook 120 Total project slate = 525 mtpa by 2020 100 80 Possible, probable & speculative mtpa 60 Existing and under construction 40 20 0 Venezuela Norway Indonesia Yemen…
Supply demand Australia competitive environment Australian LNG projects 4 status projects 180 3 projects 160 5 140 projects 6 projects 120 Expansion 18 projects 100 Study mtpa 80 Feed Construction 60 Operational 40…
Unconventional gas BG Group & Queensland Gas Co. (QGC) alliance BG Group/QGC alliance Feb 2008 BG Group acquired a 9.9% stake in QGC & 20% interest in QGC CSG assets Nov 2008 BG Group made an unconditional on market takeover…
Unconventional gas What is coal seam gas Nomenclature CBM Coal Bed Methane (US) CSM Coal Seam Methane (Australia) CSG Coal Seam Gas (Australia) Gas (primarily methane) is adsorbed on the coal surface Held in place by weak…
Unconventional gas Queensland Curtis LNG (QCLNG) Curtis Island Progressing permits North North China China Bay Bay Laird Laird Point Point (BG (BG site) site) LNG precinct gazetted Hamilton Hamilton Point Point West West…
Unconventional gas QCLNG marketing Existing BG Group sales to Asia 1 train Singapore, HK Expressions of interest received far in excess of availability Building on BG Groups existing close relationships QCLNG advantages Early…
Conclusions Prices and costs are a moving target Near-term impact: trade flows Longer-term impact: supply Barriers to market entry reducing but only on the buyers side Trade complexity growing Flexible volumes will seek the highest…
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