CHENIERE ENERGY, INC. How is the Rest of the World s LNG Interfacing With Europe?

Transcription

1 CHENIERE ENERGY, INC. How is the Rest of the World s LNG Interfacing With Europe? European Gas Conference - Vienna Andrew Walker VP LNG Strategy January 23, 18

2 2 Safe Harbor Statements Forward-Looking Statements This presentation contains certain statements that are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical or present facts or conditions, included or incorporated by reference herein are forward-looking statements. Included among forward-looking statements are, among other things: statements regarding the ability of Cheniere Energy Partners, L.P. to pay distributions to its unitholders or Cheniere Energy Partners LP Holdings, LLC or Cheniere Energy, Inc. to pay dividends to its shareholders or participate in share or unit buybacks; statements regarding Cheniere Energy, Inc. s, Cheniere Energy Partners LP Holdings, LLC s or Cheniere Energy Partners, L.P. s expected receipt of cash distributions from their respective subsidiaries; statements that Cheniere Energy Partners, L.P. expects to commence or complete construction of its proposed liquefied natural gas ( LNG ) terminals, liquefaction facilities, pipeline facilities or other projects, or any expansions or portions thereof, by certain dates or at all; statements that Cheniere Energy, Inc. expects to commence or complete construction of its proposed LNG terminals, liquefaction facilities, pipeline facilities or other projects, or any expansions or portions then of, by certain dates or at all; statements regarding future levels of domestic and international natural gas production, supply or consumption or future levels of LNG imports into or exports from North America and other countries worldwide, or purchases of natural gas, regardless of the source of such information, or the transportation or other infrastructure, or demand for and prices related to natural gas, LNG or other hydrocarbon products; statements regarding any financing transactions or arrangements, or ability to enter into such transactions; statements relating to the construction of our proposed liquefaction facilities and natural gas liquefaction trains ( Trains ) and the construction of the Corpus Christi Pipeline, including statements concerning the engagement of any engineering, procurement and construction ("EPC") contractor or other contractor and the anticipated terms and provisions of any agreement with any EPC or other contractor, and anticipated costs related thereto; statements regarding any agreement to be entered into or performed substantially in the future, including any revenues anticipated to be received and the anticipated timing thereof, and statements regarding the amounts of total LNG regasification, natural gas, liquefaction or storage capacities that are, or may become, subject to contracts; statements regarding counterparties to our commercial contracts, construction contracts and other contracts; statements regarding our planned development and construction of additional Trains or pipelines, including the financing of such Trains or pipelines; statements that our Trains, when completed, will have certain characteristics, including amounts of liquefaction capacities; statements regarding our business strategy, our strengths, our business and operation plans or any other plans, forecasts, projections or objectives, including anticipated revenues, capital expenditures, maintenance and operating costs, run-rate SG&A estimates, cash flows, EBITDA, Adjusted EBITDA, run-rate EBITDA, distributable cash flow, and distributable cash flow per share and unit, any or all of which are subject to change; statements regarding projections of revenues, expenses, earnings or losses, working capital or other financial items; statements regarding legislative, governmental, regulatory, administrative or other public body actions, approvals, requirements, permits, applications, filings, investigations, proceedings or decisions; statements regarding our anticipated LNG and natural gas marketing activities; and any other statements that relate to non-historical or future information. These forward-looking statements are often identified by the use of terms and phrases such as achieve, anticipate, believe, contemplate, develop, estimate, example, expect, forecast, goals, guidance, opportunities, plan, potential, project, propose, subject to, strategy, target, and similar terms and phrases, or by use of future tense. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Our actual results could differ materially from those anticipated in these forwardlooking statements as a result of a variety of factors, including those discussed in Risk Factors in the Cheniere Energy, Inc., Cheniere Energy Partners, L.P. and Cheniere Energy Partners LP Holdings, LLC Annual Reports on Form 1-K filed with the SEC on February 24, 17, which are incorporated by reference into this presentation. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these Risk Factors. These forward-looking statements are made as of the date of this presentation, and other than as required by law, we undertake no obligation to update or revise any forward-looking statement or provide reasons why actual results may differ, whether as a result of new information, future events or otherwise. Reconciliation to U.S. GAAP Financial Information The following presentation includes certain non-gaap financial measures as defined in Regulation G under the Securities Exchange Act of 1934, as amended. Schedules are included in the appendix hereto that reconcile the non-gaap financial measures included in the following presentation to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.

3 Cheniere Project Update Sabine Pass Liquefaction Project (Louisiana) Corpus Christi Liquefaction Project (Texas) Four trains operating, and one under construction (22.5 mtpa total) Contracts with 3 long-term buyers now commercially operational Over 23 destination-flexible cargoes loaded since start-up. Sent to 25 different countries. Train 6 is fully permitted & ready to commercialise First greenfield facility in the U.S. lower-48 Two trains under construction (9 mtpa total) 77.4% project completion (as of November 17) First LNG expected in late-18 Train 3 is fully permitted & being commercialised

4 Destination of Sabine Pass Cargoes Since Start Up, More Than 23 Cargoes Loaded and Delivered to 25 Countries London, U.K. Houston, TX Washington, DC Dominican Republic Mexico Poland, Lithuania, Netherlands, United Kingdom Portugal, Spain Italy, Malta, Egypt, Turkey, Jordan Kuwait, UAE, Pakistan Beijing, China India, Thailand China, Taiwan Singapore Japan, South Korea Tokyo, Japan Santiago, Chile Brazil Chile Cheniere LNG Facility Cheniere Office Cargo Delivery Destination Sources: Cheniere Research, Kpler MENA Middle East North Africa Argentina Sabine Pass Exports By Destination Region (Since Startup (1) ) (1) Date reflects cargo loading date until January 4, 18, representing all cargoes that have loaded and discharged.

5 mtpa U.S. LNG Capacity Under Construction Cheniere Constructing Half of U.S. LNG Export Capacity Cheniere Export Project Non-Cheniere Export Project U.S. LNG Capacity Under Construction Dec-17 Cameron LNG T3 Cameron LNG T3 Freeport LNG T3 Cameron LNG T1 Sabine Pass T5 Corpus Christi T2 Freeport T2 Freeport T1 Corpus Christi T1 Elba Island Phase 1-2 Cove Point 1 Sabine Pass T1-4 Jan-16 Jan-17 Jan-18 Jan-19 Jan- 5 Source: Cheniere Research estimates for first export. Actual start dates may differ depending on construction schedules

6 mtpa Cargoes / Month No. of FOB Customers 6 U.S. LNG Driving Change in the Industry Largescale resource base with strong Government support for exports Tcf 3 1 U.S. Future Supply of Natural Gas (1) Diversification from oil indexation Non-shale Shale EIA Proved Reserves LNG Contracts by Price Index (3) Henry Hub Europe gas Hybrid Oil LNG demand LNG trade forecast HH index Oil index flexible U.S. cargoes per month by - underpinning growing industry liquidity Inter-project competition driving innovation Visualization of possible mid-scale trains at Corpus Christi - Source: Cheniere Source: (1) Potential Gas Committee, 17; EIA (Proved Reserves), (2) Cheniere Research, Primary FOB Customers Only, 1% UF, 17, cm vessel (3) Cheniere interpretation of Wood Mackenzie data (Q1 17) U.S. Supply & FOB Customers (2) US Cargoes / month (Left Axis) No of companies lifting US LNG (Right Axis) J A J O J A J O J A J O J A J O J A J O Midscale trains 3 1

7 MT/month Global LNG balance 15 to Aug 17 7 Rising supply not yet overflowing into N. Europe Supply: Australia + US Imports: UK + Netherlands + Belgium Where did the incremental global supply go? ~6 MT Source: Waterborne Data, Graph based on Akos Losz/ Teddy Kott CGEP (17) Incremental imports since 14 New importers in 15 Others +ve China Egypt India Jordan Pakistan Spain Thailand Taiwan UAE Italy France Others -ve Mexico South Korea Brazil Japan MT imported Jan 15 to Aug 17 above 14 levels +1 MT -4 MT Net ~6 MT Note: countries with less than +/-3 mt increment were aggregated

8 Supply Asia MENA Lat Am N.America M.Europe N.Europe MTM mt MTM Market Balance 17 Supply & regional imports Jan-Dec YOY (17 v 16) 6 5 China LNG imports Range: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Northern Europe LNG imports -5 2 Range: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 8 Source: IHS Waterborne (18) Note: Northern Europe = U.K., Netherlands, Belgium

9 $/MMBtu Global Gas Prices (as of 3/1/18)* Asia Spot LNG Asia L-T Contract Proxy Q4 17 Q1 18 Cal. 18 Brent $57.1 /bbl $66.7 /bbl $65.93/ bbl JKM $7.92 $1.31 $8.1 TTF $6.39 $6.76 $6.43 HH $2.93 $2.89 $2.85 Forward Curves 15 1 Oil parity 1 TTF 5 5 Henry Hub Note: Asia L-T Contract Proxy = 14.85% Japan Crude Cocktail (3-month average)+ $.5/MMBtu; same formula is used with Brent crude oil prices for forward curves 9 Source: Bloomberg, CME, ICE, Platts, Japan Ministry of Finance, Cheniere Research * 3rd Jan 18

10 mtpa Europe LNG Imports to 1 8 This was the outlook in January 17 Views of various research houses Expected growth of ~3 to ~4 mtpa Source: Various research house views (16); Wood Mackenzie, FACTS Global Energy, IHS, PIRA, Gas Strategies, Poten and Partners 1

11 mtpa Europe LNG Imports to 1 8 January 18 update Views of various research houses Expected growth of ~3 mtpa actual 16 actual Range of views in January Source: Various research house views; Wood Mackenzie, FACTS Global Energy, IHS, PIRA, Gas Strategies, Poten and Partners

12 bcma European Gas Supply to 35 6 Europe (EU ) supply Determining factors Overall Demand Economic Growth 4 LNG Russia Piped Coal / Carbon price Oil price LNG Global supply / demand balance Russian pipe-gas Near-term: market share vs SMRC Other Piped Longer-term: LRMC Other pipe-gas Norway Algeria Indigenous Production 1 15 ' 35 Southern Corridor (expansion) Indigenous production Groningen Cap North Sea decline rate Source: Cheniere interpretation of Wood Mackenzie data (H2 17) 12 12

13 Atlantic Basin LNG Supply & Markets U.S. to become largest supplier in the Atlantic Basin by 15 AB LNG supply (53 mtpa, 22% of global supply) Import markets (existing and u/c) Export countries (existing and u/c) Russia W. Norway 13 US 42% Cameroon 1% Angola 4% Nigeria 37% Algeria 24% Norway 3% Trinidad 24% Algeria 7% Nigeria 15% Trinidad 1% E.G. 2% E.G. 7% Norway 8% AB LNG supply (134 mtpa, 35% of global supply) Russia W 13% Egypt 3% U.S. Mexico Jamaica Colombia Source: Cheniere interpretation of Wood Mackenzie data (Q4 17) Canada U.S. Dominican Rep. Puerto Rico Trinidad Uruguay Argentina UK France Portugal Spain Brazil Poland Lithuania Netherlands Belgium Italy Greece Turkey Malta Algeria Israel Egypt Nigeria Ghana Cameroon E.G. Angola Atlantic Basin LNG projects; Existing or Under construction

14 mtpa mtpa LNG Supply vs. Demand to Production capacity 15/ [1] Malaysia US Qatar Australia 15 Qatar LNG trade forecast USA Australia 15 to 3 CAGR(%) = 4.6 New supply Supply: existing and under construction Source: Cheniere Research estimates; Woodmac for historical figures 14

15 Slowdown in LNG supply project FIDs mtpa FIDs per annum (total volume) Qatar Hiatus Australia US Hiatus Other Aus US Qatar 15 Source: Cheniere interpretation of Wood Mackenzie data (Q1 17)

16 Conclusions 1. An LNG-driven transformation of global gas is underway Flexible U.S. LNG ramping up and responding to market signals Driving development of an interconnected and more liquid global market-place Europe acting as the balancing market for LNG 2. Flexible LNG set to have a growing role in Europe LNG provides supply diversification, supply competition, a transparent pricing point and volume flexibility Declining domestic supply means that both LNG and pipeline supplies will be required U.S. as the largest Atlantic Basin LNG supplier by well-placed to provide baseload & flexible LNG to Europe 3. Forecast LNG oversupply is not yet evident in the current market Global LNG markets responding to lower prices & increased LNG accessibility; government policies favouring gas LNG supply into Europe still expected to grow over next few years Global markets will need additional LNG supply early next decade - will Europe be a passive or active player? 16

17 Thank You 17