Global LNG: are the dynamics changing Betsy Spomer, SVP Global Business Development, BG Group International Petroleum Week 17 February 2014 Methane Shirley Elisabeth LNG vessel
BG Group snapshot A world leader in natural gas UK FTSE 15 company Circa 60 billion market cap Operates in over 20 countries Leading LNG position Long heritage in the LNG industry A world leader in natural gas 3
LNG: trade outlook to 2025 Global LNG supply (mtpa) 500 2013 to 2025 CAGR(%) = 4.6 to 5.6 External 400 LNG trade forecasts* Supply gap: 150 mtpa 300 Under construction 200 Supply: existing and under Existing construction…
LNG: near-term outlook QCLNG Terminal, Curtis Island, Australia
LNG today 2013 trade = 240 mt* (176 bcma) 10% of all gas consumed A global trade: 17 exporters 27 importers 382 ships An increasing dynamism: 3 new markets added in 2013 2012 short-term trade** = 25% of total, 2013 likely to be…
LNG market has tightened LNG imports by region 2008-15 (mtpa) 300 Market loosening Market tightening Supply outpacing Asia demand growth Asia demand growth outpacing supply 250 Total supply 200 150 Europe FORECAST 100 Asia…
Asia spot LNG price trades between NBP and oil Asian spot prices have varied between Global Asia Fukushima European prices (NBP) recession recovery earthquake and oil parity 25 Trend expected to continue 20 Oil parity Asia…
LNG supply - next wave is under construction 90 Exporters by rank: 2018 80 2018 70 2013 60 50 mtpa 40 30 20 10 0 PNG Algeria Peru Colombia Oman Angola Qatar Brunei UAE Malaysia…
Global LNG imports by region Pacific Basin Atlantic Basin 350 350 Middle East Bunkers Other Asia Europe 300 Other 300 China Asia N. America S. America India 250 China 250 JKT mtpa 200 200 India 150 150 100 JKT 100…
Europe LNG imports 2010 to 2013 12 3-month moving average 5 2013 vs. 2010 Netherlands 0 10 Netherlands UK -5 Spain 8 Belgium Main -10 Europe Turkey bcfd -21.1 6 France mt Spain -15 Italy 4 Portugal Turkey -20…
UK as a global balancing market Japanese earthquake/tsunami 10 9 Qatari supply to 8 Middle East and 7 Asia bcfd 6 5 4 Other 3 UK LNG 2 imports Qatari (total) supply to 1 Qatar UK 0 2008 2009 2010 2011 2012 2013…
Global balance outlook Supply (mtpa) Volumes available for Europe (mtpa) 450 80 Global market tight 400 70 350 2011 import level 60 300 2012 import level 50 Under construction 250 40 200 Europe minimum Existing (estimated) 30…
European gas market observations 2012 gas demand below 2001 level Triple whammy at present; Low economic growth US coal exports Renewables targets Russian exports to Europe at record high in 2013 Europe acting as balancing…
LNG: longer term outlook
Gas demand growth driven by Asia/Middle East Global gas demand (bcma) 2.4% CAGR Source: BG Group outlook 2013 16
Global gas supply challenge (2012-25) 5000 (bcma) 4000 2.4% pa 3000 9% pa 2000 1000 0 2012 consumption Production decline Consumption New supply required increase by 2025 Sources: BG Group (2013), BG Group interpretation…
Strong Asian LNG demand growth 350 CAGR CAGR 2000 2010 2010 2025 300 6.2% pa 6.1% pa Other 250 China mtpa 200 India 150 100 JKT 50 0 2000 2005 2010 2015 2020 2025 Asia represents 75% of global trade in 2025…
FSRUs reducing market lead-time UK Lithuania Italy China FSRU US Kuwait locations Israel Puerto Rico India 16 Existing Jordan 4 U/C Dubai, UAE Colombia Malaysia 7+ U/D * Brazil Chile Indonesia * Uruguay Argentina In…
A rapidly changing supply perspective US LNG exports Mozambique Cumulative DOE filings (mtpa) Reserves announced* (tcf) 300 140 29 120 250 25 23 100 200 16 14 80 150 12 1st appraisal well 60 BG Group - SP deal 8 100…
Key new supplies for Asia W. Canada Japan 3,940 US Gulf Coast Asia Pac. n miles Japan E. Africa 9,282 n miles Japan 6,747 Other trades (n miles) n miles Source Market Distance Qatar Japan 6,314 Australia Japan 3,683…
US LNG exports (2025) 300 250 Supply constraints 200 150 Market constraints 100 50 0 Total applied Local opposition Developer Asian available Other projects** US export capability demand* outlook Notes *total…
US exports cost stacks Asia Europe 20 0.1485*JCC+0.50 18 16 Regas 14 /mmBtu (2015) 0.11*crude oil 12 Shipping 10 DES = Toll & Fuel 11.30 DES = 8 9.70 HH 6 LT price (Asia) 4 LT Price (EU) 2 0 70 100 130 70 100 130…
Global balance outlook Supply (mtpa) Volumes available for Europe (mtpa) 450 80 Loosening Global market tight 400 70 350 2011 import level New U.S. 60 300 2012 import level 50 Under construction 250 40 200 Existing 30 150 20…
Global balance outlook Supply (mtpa) Volumes available for Europe (mtpa) 450 80 Loosening BG trade outlook Global market tight 400 70 350 2011 import level New U.S. 60 300 2012 import level 50 Under construction 250 Additional…
LNG costs Liquefaction plant EPC costs GRASSROOTS EPC and project costs have EXPANSION increased rapidly since 2006 FLNG AUSTRALASIA Cost spread is wide post-2006 US PROJECTS CANADA PROJECTS By geography Within Australia…
Are the dynamics changing Yes New suppliers, markets and players Increasing flexibility New pricing constructs LNG as a transport fuel But US LNG not a universal solution Pricing will remain regional Oil indexation will remain…
BG Group LNG market outlook Illusion of a New supply will Non-US LNG coming buyers take longer than projects will also market envisaged be required Prices will remain Substantial demand Majority of volumes regionally upside…
Implications for Europe Near-term Reducing LNG volumes as market tightens How low can European LNG imports go LNG imports into the UK will depend upon Qatari behaviour Pipeline volumes replacing LNG Longer-term LNG eventually…
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