LNG: Our Fluid, Floating Future The Oilprice.com Comprehensive Guide to LNG Prospects & Markets Around the World

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2 LNG: Our Fluid, Floating Future The Oilprice.com Comprehensive Guide to LNG Prospects & Markets Around the World Natural gas is a commodity that finds itself in a race to the finish line between three elements: piped natural gas, LNG and Floating LNG. It s an exciting game that, at the end of the day, is all about getting more out of the ground for less money and getting it to market faster and easier. LNG, and particularly the floating variety, is the future, and also why we have chosen to close out our series of reports with this topic, which has become an obsession for many prospective investors. The most important message for investors is that LNG is NOT a revolution. It s an evolution a term that we hope instills a certain amount of investor rationality and patience. The question is not whether LNG is the future it is. The question is when, and it s a very important question for any investor who is preparing to gamble on this clean fuel. What is clear is that, while today LNG accounts for only a relatively small portion of the world s gas supply, it is hands down the fastest-growing segment, experiencing a 140% increase in global demand between 2000 and 2012 alone. And the continuing game is all about streamlining, which is where the floating aspect comes into play. The math is quite simple if you leave out regulatory environments and geopolitics. Liquefied natural gas (LNG) is cleaner than traditional fuels and the more we use it the less we will contribute to global emissions. The world is working towards this transition, and the math tells us that, from a US perspective, investing in LNG appears to be the obvious path to future wealth. The trap is in the timing, and particularly for investors who focus on a single element of this future game mouth-watering prices that LNG fetches in Asia. Prices are tumultuous, and this is a longer-term game with a much bigger picture. Understanding this big picture is what will set you on a course to profit from the LNG future. In this report, we will examine at length: What exactly is LNG and how it is processed and transported Why LNG is the future and why it is an ideal transition fuel Why the future is floating The biggest global LNG venues; where they are and how much they cost Why the US is late to this game The components of LNG investing Politics, Geopolitics and the market what helps and hinders LNG oilprice.com I 02

3 Part I: Evolution, if Not Revolution What is LNG? LNG is simply natural gas rendered in a liquid state. It is a clear, colorless, non-toxic liquid that is formed when natural gas is cooled to -162 Celsius or -260 Fahrenheit. Natural gas is typically at least 90% methane, but may also contain propane, ethane and small quantities of other compounds, which are removed when natural gas is liquefied, rendering LNG a very clean product. The process of cooling the natural gas reduces its volume 600 times, and is undertaken on what is called an LNG Train. An LNG train is a natural gas plant s liquefaction and purification facility. The typical LNG plant will have more than one train, with each one operating independently of the others. The world s largest trains are owned by Qatar (Ras Laffan) and can liquefy around 1 billion cubic feet of natural gas per day. In total, the Ras Laffan LNG facility has two massive trains and four smaller trains. (CNG), natural gas liquids (NGL), liquefied petroleum gas (LPG) or gas to liquids (GTL), all of which are comprised of different components. How is LNG Stored? LNG is stored in large, refrigerated cylindrical tanks with domed roofs kept at atmospheric pressure. Both pressure and temperature are kept constant in a process referred to as auto refrigeration. The tank released steam (in the form of LNG boil-off vapor), is recaptured by LNG facilities and either used as fuel or sent through pipelines. LNG can also be stored underground in specially designed tanks. The process of cooling the natural gas makes it significantly easier to store in large volumes and to ship out for export over long distances. LNG is not to be confused with compressed natural gas oilprice.com I 03

4 How is LNG Transported? For international trade, LNG is transported in special tanks aboard double-hulled ships to receiving terminals overseas. It then goes through a regasification process, which turns the LNG back into natural gas. At this point, the natural gas can then be transported through local pipeline systems for end-user distribution. Worldwide, there are approximately 170 LNG transport vessels in operation, with many more in the works. LNG Import Terminals: These terminals are equipped with berths, for mooring ships and offloading LNG, as well as storage tanks and re-gasification facilities. The new trend in the US is to repurpose some of the existing LNG import terminals to handle exports to countries with which the US does not have Free Trade Agreements (FTAs), but we ll get into this further down in this report. LNG Export Terminals: An LNG export terminal is pretty much the same as an import terminal with one big difference: While an import terminal will have a re-gasification plant, an export terminal will have a liquefaction plant, which, again, is called a train. While it may seem a relatively easy job to repurpose an existing LNG import terminal into an export terminal, keep in mind that liquefaction facilities are extremely expensive and the cooling process itself requires a significant amount of energy. When export is not the objective, there are smaller-scale operations that liquefy natural gas simply to store it more conveniently for later use, when supply and demand dynamics make more sense. Natural gas is sometimes taken from a pipeline, liquefied and stored for high-demand seasons, with small-scale regasification plants in this case called peak oilprice.com I 04

5 shavers. Similarly, LNG satellite plants use tanker trucks to bring in LNG, store and re-gasify it when necessary. When LNG Starts Floating While, as of 2015, there are no Floating LNG facilities (FLNG) in operation, the future of LNG is certainly in moving the whole process offshore in a very big way. The unfolding revolution in Floating LNG technology is not only important to a new global gas delivery system, but also to unlocking more remote natural gas resources, and basically killing two birds with one stone: natural gas extraction and floating infrastructure to get it straight to market. If it works the way it s supposed to and it s still too early to tell we are looking at an idea that could potentially render gas production both faster and cheaper at the end of the day. The main objective here is to get product to market faster and to bypass very long, very expensive and very geopolitically complicated pipelines, which also require a massive amount of maintenance, as well as avoiding the construction of onshore plants, which carry a significant environmental footprint. This LNG revolution began in earnest in 2011, when Shell decided to build the world s first floating LNG project off the north-west coast of Australia. This project, The Prelude, is aptly named as the prelude to the next evolutionary sea-change for the natural gas sector and what will likely be a massive business by somewhere around 2020, according to KPMG. By 2014, Shell had laid the keel of what is the largest floating structure ever built in the world. FLNG Project Snapshots First of all we ll start by noting that there are really only two true FLNG projects out there Petronas and Shell s Prelude. By this we mean that the Prelude, for instance, is floating in entirety, while some of the other projects are only partially floating and not as comprehensive and all-contained. Petronas PFLNG-1 Project This project, by Malaysia s Petronas, was scheduled to be completed in 2016 and would first be deployed to the offshore Kanowif field for five years, and then moved to another field. The plan is to park the floating facility near offshore gas fields to produce, liquefy, store and transfer LNG at sea to bigger ships for export. This, according to Petronas, will save hundreds of millions of dollars in pipeline construction and render production vastly less expensive. The floating facility is designed to operate in shallow waters with the capacity to produce 1.2 million metric tons per year (mtpa) of LNG, with a year lifespan. With oil prices at $70 per barrel or higher, Petronas claims the project would enjoy a double-digit internal rate of return, but avoids estimating rates of return for oil prices under $70/barrel. Petronas second PFLNG project, PFLNG-2, was scheduled to go online in late This project is designed for deepwater gas fields, with a capacity to produce 1.5 million mtpa of LNG. The Petronas projects will be the first Floating LNG projects to come online, and thus they will serve as a barometer for how the idea holds up to various market conditions. oilprice.com I 05

6 Shell s Prelude Australia Like the Petronas projects, Shell s Prelude is a true open-water LNG project in every respect, which means it s much more expensive and much more challenging. This is the world s largest floating platform, and aims to produce a minimum of 3.6 million metric tons of LNG per year beginning in Shell s shied away from putting a price tag on this project, but most estimate it at around $13 billion. Japanese Inpex s Abadi FLNG Project Indonesia Not only is this project on track, but it s being expanded while others languish due to unfavorable market conditions. This reflects the Japanese desperation to forward FLNG. In mid-2015, Inpex announced it would triple the capacity of its proposed FLNG plant at Indonesia s offshore Masela block to 7.5 million metric tons per year (mtpa), from 2.5 million mtpa originally. This decision was made based on the likelihood of recoverable gas reserves increasing here from 6 trillion cubic feet to 12 trillion cubic feet. The project is being developed by Inpex in partnership with Shell. The Abadi project is situated in the Masela block near Indonesia's border with northern Australia. Production at the Abadi LNG development is expected to begin in 2022, three years later than planned. Woodside Petroleum s Sunrise FLNG Project Timor- Leste This project, in which Shell and ConocoPhillips are partners and Australia s Woodside the operator, is experiencing some political problems. Some officials in Timor-Leste are opposed to an FLNG project to develop the country s Sunrise gas field, describing the proposed LNG vessel as a target for terrorists. We find this form of thinking naïve at best. Onshore facilities are much easier to target and are much more attractive targets for terrorists who are looking to ensure maximum damage and maximum publicity. There is probably much more corrupt politics behind this battle that have nothing to do with potential terrorism targets. This region, in the Timor Sea, is home to more than 15 trillion cubic feet of discovered gas that still has to be developed, with the Greater Sunrise fields being the most advanced and promising. So once this project finally gets off the ground, there will be a windfall. For now, it remains a great idea on paper an idea that could produce around 4 million metric tons of LNG per year if it can overcome the political wrangling. Pacific Rubiales FLNG Project Colombia This project, originally scheduled to go online in 2014, then in 2015, which was delayed due to unfavorable market conditions, is a floating liquefaction, regasification and storage vessel designed to export 0.5 mtpa. It is being built by oilprice.com I 06

7 project partner, Belgium-based Exmar, at a Chinese shipyard. The projects costs $180 million and plans to provide LNG to customers in Central America and the Caribbean. ExxonMobil/BHP s Scarborough FLNG Project The Scarborough FLNG project is a joint venture between BHP Billiton and ExxonMobil to use floating facilities to develop the Western Australia offshore Scarborough natural gas field, which has an expected producing life of years. But low prices and increasing competition from the US prompted the partners to put the project on hold in The project has since been given a lower spending priority. Excelerate s Port Lavaca, Texas FLNG Project This project was put on hold in late 2014 due to unfavorable market conditions, but was originally scheduled to start production in If it ever gets off the ground, this will be a floating LNG export facility situated between Galveston and Corpus Christi on Texas Gulf Coast. It will be designed to export LNG to markets worldwide. It will have a production capacity of 3 million tons per year, a storage capacity of 250,000 cubic meters and a fully integrated gas processing plant. In size, we re looking at a floating vessel 338 meters in length and 62 meters in breadth. This project is an inshore barge-mounted designed so it will closely resemble a land-based facility and we do not consider it a true floating project on the same level as Shell s Prelude. Eni s Coral FLNG Project Mozambique Italian oil and gas giant Eni is pursuing an FLNG project offshore Mozambique to develop the highly prized Rovuma Basin (read more about this basin in our previous special report). But the final investment decision (FID) was still up in the air as of mid This project would include an FLNG unit fed by subsea wells. Though the project is expensive, it would indeed make LNG production cheaper with no need for the construction of prohibitively expensive subsea pipelines and onshore processing plants. And these facilities, as we have mentioned elsewhere, can be remobilized. Production was initially expected to launch in late Perenco/Golar Cameroon FLNG Project This project is set to start production in April 2017 and, unlike many others, has stayed on track in terms of budget and startup. This is a partnership between Perenco and Golar LNG to develop Cameroon s offshore Kribi gas fields and export to global markets. Production is anticipated to be around 1.2 million tons per year of LNG for eight years, with additional reserves that may be allocated in the field at a later date. Ophir Energy s Equatorial Guinea Block R FLNG Project This project has also stayed on track, with production expected to launch in 2019, targeting 3 million tons per year oilprice.com I 07

8 The Oilprice.com Guide to Investing Oil & Gas Outside of North America (mmtpa), or 12.5 million cubic meters per day. Ophir has also led the discoveries on Block R, and these discoveries were enough for Ophir to conclude that the resources could support an FLNG train. Excelerate Energy will be the midstream partner providing the floating liquefaction and storage facilities. The plan is for a newbuild FLNG vessel with a floating offshore LNG liquefaction terminal and an LNG storage capacity of 230,000 cubic meters and side-by-side offloading. Chevron s Wheatstone & Gorgon LNG Projects Western Australia The Wheatstone Project is a joint venture between Australian subsidiaries of Chevron Kuwait Foreign Petroleum Exploration Company (KUFPEC), Woodside Petroleum Limited, and Kyushu Electric Power Company. This $29-billion project off the coast of Western Australia got off the ground in 2011 and will have two LNG trains with a total capacity of 8.9 million metric tons per year of LNG along with a domestic gas plant. First production is expected in At the same time, Chevron s Gorgon project is also being built and is further along on Barrow Island, about 60 kilometers off the northwest coast of Western Australia. The project includes three LNG trains with a 15.6 MTPA liquefaction capacity and a domestic natural gas plant. First production was initially planned for the third quarter of 2015 but delays have been problematic. Lithuania s Independence FSRU This one does not really belong in our snapshots, because it s not a true FLNG project, rather just a Floating Storage and Regasification Unit, but we re going to include it anyway because it paints a clear picture of the LNG situation in Europe and the dependence on Russian gas. In short, it shows how great a role LNG will play in Europe s future perhaps even if it s a bit more expensive to start off with. Since the Russia-Ukraine gas wars of 2009 and the latest ongoing battle that saw Russia annex Ukraine s Crimea, foster a bloody conflict in the country s east and enter into a protracted war over gas, the idea of the FSRU has gained more urgency in Europe. It is only appropriate that Lithuania s new FSRU has been named Independence. Built at the Hyundai Heavy Industries (HH) shipyard in Ulsan, South Korea for Hoegh LNG, the vessels was chartered to Lithuania s Klaipedos Nafta under a 10-year lease agreement signed in March 2012, with an option to buy. Its claim to fame geopolitics aside is that it is the first ever new-built FSRU in the world, while others have been conversions of existing vessels into FSRUs. It cost around $330 million to build between September 2012 and February 2014, and it became operational in October 2014, serving Klaipedos Nafta s LNG terminal. Independence has the capacity to store 70,000 metric tons of chilled natural gas and 170,000 cubic meters of LNG in thermally insulated membrane tanks. Its regasification capacity is around 400,000 scf/d. oilprice.com I 08

9 This was a gutsy move by Lithuania, and the rest of Europe should be quite impressed. Lithuania pays more for Russian gas than anyone else in the European Union, and this FRSU is its negotiating leverage, and it s already worked. entered the scene: Norway, Russia, Yemen, Peru, Angola and Equatorial Guinea. In addition to the tried and trusted are the emerging venues, which could change the LNG market forever with new supply sources that include East Africa, the US Gulf Coast and Western Canada. LNG Old Guard Snapshots Part II: Global LNG Venues & Players In this endeavor, we need to divide the playing field into old and new because there are the tried and true LNG venues and some very exciting emerging frontiers. The oldest LNG venues are Qatar, Nigeria, Australia, Oman and Indonesia, which began expanding production significantly in Now a new group of LNG producers have Qatar is traditionally the largest producer of natural gas in the world and the largest exporter of LNG, but Australia is threatening to overtake Qatar, and the US is hoping to not be far behind. Of the seven largest LNG projects under development as of 2015, five of them are in Australia which speaks volumes about where Australian LNG is going and the other two are in Russia, in Yamal and Sakhalin. Australia is a real LNG pioneer the first to make LNG for the hungry Asian market. The recent boom in global LNG construction could see global output almost doubling its 2012 level of 250 million tons per year by 2030, and most would agree that around 60 million tons per year of this could be from Australia, despite some recent setbacks. oilprice.com I 09

10 Take a look at some of the key LNG projects in Australia: Australia has put about $160 billion into its plan to become the world s largest LNG producer by We don t doubt it can secure this title, but we suspect it will take a bit longer. Of the newer old guard, Russia is an interesting story, and this is where we can really see the geopolitics of LNG at work. Russia and by Russia we mean the Kremlin s energy goblin, Gazprom could ostensibly beat out the US in terms of pricing in this game. But its pipeline deal with China was also a major blow because it effectively cut off the Chinese market for future US LNG. There was also a lot of premature talk about US LNG for Europe as a way to remove dependence on Russian gas, and while this is a clear possibility, it will be quite some time before it can be realized both logistically and in terms of pricing. For now, Russian gas is about all Europe can afford. The US real trump card here is that it has many more LNG projects under way than Russia does, so eventually it will have the capacity to win this game at least in terms of volume. Emerging Venue Snapshots US Gulf Coast This is an emerging venue due to the shale gas boom, and the need for an outlet for this gas now that the domestic market has all it needs. But this requires some tricky politicking because, as it stands, and without special permission, US domestic producers are not allowed to export LNG to countries with which the US does not have Free Trade Agreements (FTAs). While the big sub-venue here is the Gulf Coast, the Alaskan North Slope is also an emerging player, with ExxonMobil, ConocoPhillips and BP at the early stages of considering an LNG project here. Some LNG is produced in Alaska for export to Japan because no options exist for transporting oilprice.com I 10

11 Alaskan natural gas production to the lower 48 states. The US entered the LNG game late in the day at a time when projects were already quite far along in other global venues. As of 2015, the US had five LNG export terminals under construction, with one scheduled to be online in Western Canada Western Canada is an emerging venue likewise due to a boom in shale gas production. But while things are moving forward more quickly in the US, Western Canada s 15 proposed projects are proving more problematic. The Pacific Northwest LNG project hit a road block because this onshore giant would have to be built on aboriginal lands. East Africa This venue is emerging as a major LNG export giant because it is home to deepwater basins that will be the scene of some of the world s largest and most impressive Floating LNG projects. There are two venues that stand out here first and foremost: Tanzania and Mozambique, both of which we covered in our previous special report on global oil and gas investing. In Tanzania, we re looking at an LNG facility in Mnazi Bay with very established LNG players. This is for the forward-thinking, long-term investor because this project s projected start date is In Mozambique, we re looking at less experienced LNG players, but more projects to choose from, including two onshore LNG facilities and a potential FLNG project proposed by Eni. The lure here is the vast potential of these deepwater basins that are only now emerging as giants. To determine the potential for LNG exports out of East Africa keeping in mind that this is an emerging venue you have to look at how it would get to market. The closest market for Mozambique will be India, which is another LNG-hungry venue. Europe and China will be roughly the same distance, while Japan and North Korea the biggest importers are the farthest away. oilprice.com I 11

12 Part III: The Markets The largest markets for LNG are Asian, and the biggest Asian importers are Japan and South Korea. But they pay a high price for this LNG a situation that is doing a great deal to forward massive new LNG projects, particularly of the floating variety. China is partly remedying its need for more and cheaper gas through a pipeline deal with Russia, which took 10 years to get down on paper, but will see Russia pipe millions of tons of cheap natural gas into China, reducing the attractiveness of China as an LNG market. Most eyes will be on Japan, which has a very strong interest in seeing major FLNG projects get up and running. After the 2011 Fukushima nuclear disaster which resulted in the shut-down of Japan s nuclear fleet, the country s LNG imports increased by 25%. For Japan, though, its current LNG imports are uncertain because they go through the Straits of Hormuz, which is a geopolitical disaster waiting to happen, as well as Malacca. The Japanese are also very concerned about a threat to global gas supplies from conflicts and crises, such as that in Ukraine. All of this makes FLNG very important to Japan. Since 2006, we also have a fairly long list of first-time LNG importers: China, Brazil, Chile, Dubai, Kuwait, the Netherlands, Canada and Mexico. Part IV: The Risks The first thing you need to know about risk in this market segment is that it is led, first and foremost, by unpredictable change. You can read all the prognoses you like from a multitude of experts, but at the end of the day, it is impossible to predict and you have to follow your own gut instinct. What we have seen so far is a period of massive obsession focusing on an LNG revolution, followed by a period of disappointment as oil prices plummeted in mid-2014 and hugely ambitious LNG projects abruptly cooled down. Other: Algeria, Egypt, Norway, Equatorial Guinea, Trinidad, Yemen, Peru, Angola re-exported amounts Source: EIA For Europe, which is struggling to loosen the Russian gas noose, LNG still remains too pricey to be a full-on alternative to piped natural gas, but the future is moving in this direction geopolitics willing. This does not mean that LNG is dead far from it. The investor s mistake here is found in over-exuberance, which favors irrationality. LNG is the future, but it should be viewed as evolutionary rather than revolutionary. Evolutions happen over time and are logical progressions, while revolutions are forced. The latter may be more exciting, but the wise investor recognizes the difference and can weather shifts in supply and demand and fluctuations in price. At the end of the day, oilprice.com I 12

13 LNG (like everything else) will be influenced by supply and demand, price, technological advances, and political and geopolitical dynamics. For onshore LNG projects, with construction costs typically designed to be about 30% of the budget, times have been tough. According to information compiled by KPMG in 2014 the same year that the beginning of a sharp drop in oil prices caused additional panic--australian onshore LNG project costs had risen to 50-60% of the total budget. Liquefaction plant average capital costs rose from $300/ton per year to $1,200/ton per year from 2000 to Chevron s Gorgon project was originally supposed to cost AUS$37 billion, but that was inflated to AUS$54 billion. Cost: Is It All Worth It? The first rule of thumb is to fully grasp the fact that LNG operations are very capital intensive, with upfront costs a bit overwhelming because they include massive and complex construction projects from liquefaction and regasification facilities to specially designed LNG ships, among many other things. What interests us quite a lot is the cost-profit comparison between onshore LNG projects and offshore, FLNG. Massive onshore LNG projects are promising but costs to get them up and running have ballooned and there is a long wait to get product to market, which leads to major frustration. The costs also mount due to remote location infrastructure challenges, opposition to the projects themselves and a complicated road to regulatory and environmental approval. In short, cost over-runs rule the day. With onshore cost over-runs in mind, investors are increasingly looking to Floating LNG projects. Some estimate that between 2014 and 2020, $60 billion will be spent on FLNG projects just for starters. Two-thirds of this will likely to go liquefaction infrastructure, while the remaining will be for import and regasification facilities. The costs of liquefaction plants have, for some reason, more than doubled between 2003 and 2013, and it would appear oilprice.com I 13

14 that these costs have increased at twice the rate of other upstream oil and gas facilities during the same period. (This Oxford Energy study offers a detailed look at these cost increases.) When you consider a potential investment in FLNG, make sure you are prepared to be in it for the long term, and that you can handle the ups and downs of getting these massive projects off the ground. Pricing Vulnerability Like everything else, LNG is vulnerable to pricing. The weather, and changes in season can cause drastic changes in prices. Oversupply can also significantly affect prices, and you need to be prepared for shifts in demand in the major LNG markets. It is very unlikely that you will see any supply shortages in the near to medium-term future. There are clear advantages to FLNG, but at the same time this type of investment will not be for the faint of heart. The risk over the short term is very high, but over the longerterm, an investors FLNG foresight will likely pay off in a very big way. Some clever promoters will try to tell you that LNG is less vulnerable to price shocks than other commodities, but this is certainly not the case. To hit this point home, let s look at two key Asian markets, Japan and South Korea, both of which have huge appetites oilprice.com I 14

15 for LNG, but this appetite needs to be constantly measured and analyzed. To do this, you need to understand their energy options. metric tons per year of LNG for 20 years when the facility s second train becomes operational. This is what you need to look for as an investor. What have they already lined up? Japan has long relied on nuclear energy, and the Fukushima disaster was one of the biggest game-changing events for global LNG markets. In the aftermath of this disaster, Japan s demand for LNG skyrocketed, making it the key importer of LNG in the world. Nuclear energy is extremely important to Japan and the issue is very political. One would have had to follow the politics to determine the likelihood of nuclear energy again playing a major role in Japanese energy. So far, some nuclear reactors have been put back online, which means that demand for LNG has declined in accordance with this. Conclusion When South Korea put its nuclear plants offline for safety reasons, the country started stockpiling LNG, sending demand soaring. But when those plants went back online, that demand fell. Spot Market Concerns The majority of LNG supply around 80%-- is contracted at fixed prices. That leaves around 20% that is bought and sold by countries on the spot market. It is this spot market that determines the daily prices for traders buying LNG on the open market. This spot market is the bane of the LNG investors existence. In this environment, the investor must focus on producers who can cement long-term supply contracts at higher prices. If you look at the US projects, for instance, keep in mind that it will be the federal governments approval and final investment decisions that allow them to cut deals for long-term LNG contracts. For Cheniere, this means a deal with Australia s Woodside Petroleum to purchase 850,000 There are all kinds of predictions out there, floating around some of them extremely tantalizing, others bordering on the doom and gloom. Shipbroker Clarksons estimates that by 2019, likely global FLNG capacity will be 44 million tons per year, about 7.5 percent of the industry s total capacity. By 2022, there could be 22 FLNG vessels in place, with another 22 possibles. This is all well and good, but as we ve cautioned, no one can predict where this market characterized by a single constant, which is unpredictability is going. It will move forward, but the timing is anyone s guess. A single weather event and or a longer-than-expected drop in prices can send the entire industry into a panic and derail investment and progress. oilprice.com I 15

16 The Oilprice.com Guide to LNG Prospects & Markets Around the World As an investor potentially interested in LNG, you need to selves for massive, long-term future rewards if they play decide where your long-term investment desires lie. their cards right. This means paying attention to the venue, Regardless of positive or negative predictions, LNG will be the facilities, the existing infrastructure, the politics of global a future kingmaker, and investors who get in on the ground demand and, for projects already underway, what s already floor and can wait out the slumps will likely position them- been contracted out. Copyright 2015, all rights reserved by Oilprice.com. No portion of this report may be published or reused in any way without the explicit consent of Oilprice.com. oilprice.com I 16

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