Global LNG recent and future structural evolutions Andrew Walker Betsy Spomer Gastech, London October 2012
Context Three paradigm shifts: 1. Crude oil price 2001 = 20 / bbl (Brent) 2012(1) = 112 / bbl (Brent) 2. US shale gas 2003(2) = US as LNG importer 2012 = US as LNG exporter 3. Fukushima +20 mtpa since 2010 future of nuclear…
LNG is becoming more flexible 7.0 Atlantic Basin to Global price Pacific Basin trade 25 markers 6.0 20 JCC 5.0 US/mmBtu 4.0 15 Asia spot mt LNG 3.0 NBP 10 2.0 5 1.0 HH 0.0 0 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2…
LNG is still far from commoditized Short vs. long-term LNG contracts (2000 2011) 250 200 Spot and short-term 150 mtpa 100 Long-term 50 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: GIIGNL…
The LNG supply challenge 500 LNG trade 450 (forecast) 400 Supply- demand 175 mtpa 350 gap 300 mtpa 250 Australia 200 Supply: Qatar existing and 150 under construction 100 50 0 2000 2005 2010 2015 2020 2025…
A rapidly changing supply perspective US LNG exports Mozambique Cumulative DOE filings (mtpa) Reserves announced* (tcf) 250 140 2010 2011 2012 2010 2011 2012 120 200 16 100 14 150 12 80 8 1st appraisal well 60 100 BG -…
Long-term supply challenges Supply prospects for 2020 (mtpa) -17% Speculative Possible Probable Under Construction Onstream Source: Wood Mackenzie - LNG Service and Tool 8
What could constrain US exports US government regulation Desire for energy independence Impact on gas prices and jobs Public concerns over hydraulic fracturing Shale sustainability (EURs unproven) Petrochemicals lobby Public…
Asia LNG demand gap vs. US exports 2020 2025 160 160 140 140 120 120 Research house views 100 100 mtpa mtpa 80 80 60 60 40 40 20 20 0 0 Asia gap US exports Asia gap US exports (research house views) (research…
Asian LNG pricing options 1. Oil indexation continue to negotiate slope, constant & kink-points 2. Price against a gas market hub alternative (HH, NBP) wisdom of linking price to a distant market HH linked pricing doesnt…
Will US exports change LNG liquidity Assumptions: 500 11% European market 450 overflow becomes spot / traded volume 400 6 bcf/d (45 mtpa) US 17% exports of which 27 350 mtpa are market Spot / traded 14% sticky: Korea (3.5)…
Conclusions Flexibility has increased - but LNG still far from commoditised Supply is still the key challenge US exports unlikely to be a panacea for long-term demand Future increase in liquidity and flexibility is not a given…
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