Access to Gas The LNG Industry s Big Challenge. Frank Harris Head of Global LNG Consulting PS1-1, LNG15 Barcelona April 24 th, 2007.

Transcription

1 Wood Mackenzie LNG15 Access to Gas The LNG Industry s Big Challenge Frank Harris Head of Global LNG Consulting PS1-1, LNG15 Barcelona April 24 th,

2 The LNG industry s current obsession with supply is justified Forecast LNG demand growth remains strong With one or two notable exceptions, regas capacity will not constrain this growth The LNG shipping sector now appears to be characterised by surplus rather than deficit and will not be a bottleneck However, supply is an issue in the short, medium and long-term and will constrain growth 2

3 In the short-to-medium term, the industry is struggling to develop supply and this will constrain demand Supply/demand balance is tight through 2010 Supply issues are becoming more common Potential for near-term demand upside Potential LNG Supply Vs. Demand From 2011 Probable supply is required to meet demand with Possible supply needed by 2012 We anticipate delays to both Probable and Possible projects which will lower supply Cost pressures Moratoria Politics Environmental hurdles It is not clear how long it will take for the pressures on supply to abate Source: Wood Mackenzie 3

4 In the longer-term, accessing the gas reserves required to feed new liquefaction projects will be the industry s big challenge There is a huge amount of known undeveloped gas Proved Gas Reserves But many reserves are unsuitable and/or inaccessible to LNG for reasons including: Domestic requirements Proximity to export market(s) via pipeline Size/quality/distribution Distance from the sea Geopolitical reality Economics Proved Reserves (Tcf) >500 Players must therefore decide how to combine exploration for additional reserves with exploitation of available known reserves Source: BP Statistical Review of World Energy (2006) 4

5 Accessing available NOGC controlled reserves is becoming tougher and less attractive NOGCs control access to the vast majority of the world s known gas reserves Global Proved Gas Reserves by Country NOGCs increasingly retaining reserves to meet growing domestic demand NOGCs now looking to co-operate with one another rather than with the IOCs NOGCs have a reduced need for the technical and capital capabilities of IOCs Where access is possible, terms are typically becoming less attractive, reflective of NOGC desire to retain value Increased competition to access reserves Source: BP Statistical Review of World Energy (2006) 5

6 which is helping drive a renewed focus on exploration Players are looking to new areas that are not controlled by a strong NOGC Balancing Risks Trading higher sub-surface risk for lower above ground risk Above ground risk of known NOGC reserves has increased With exploration, there is no guarantee that the gas is there but, assuming that it is, monetisation should be easier and more lucrative Partner alignment can be key Sub -Surface Risk Mauritania Exploration Australia Egypt Exploration Exploration Pluto MLNG Tiga EG LNG RasGas/ Qatargas GassiTouill Qatargas3/4 Iranian LNG Gas exploration is also being encouraged by: Strong LNG demand which can expedite monetisation (e.g. Pluto) Difficulties in making material oil discoveries Above Ground Risk Source: Wood Mackenzie 6

7 in new as well as existing areas????? Moratorium Busters Expansion LNG Plays Frontier LNG Plays Source: Wood Mackenzie 7

8 Summary The industry s current obsession with supply rather than regas or shipping is justified Access to the gas reserves required for longer-term growth will be a big issue IOCs must adapt their strategies as NOGC gas strategies evolve Exploration should be a key part of major LNG players strategies exploring for LNG Small E&P companies can play a critical role in the evolution of the LNG business 8

9 Contacts Frank Harris Head of Global LNG Consulting T: +44 (0) E: Gavin Law Head of Gas & Power Consulting T: E: For a copy of our LNG15 paper please visit: Visit Wood Mackenzie during LNG15 at booth number in Exhibition Hall 2 9

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