Sound Marketing for a FLNG Development

Transcription

1 Sound Marketing for a FLNG Development Alessandro Della Zoppa EVP LNG eni Midstream Gas & Power Gastech Tokyo, 6 th April 2017

2 company overview Italian Government 30% 70% Market exploration & production gas & power refining & marketing energy solutions exploration developmentope rations & technology upstream midstream gas & power retail gas & power Saipem engineering & construction Equity holdings 30.5% 100% Versalis chemicals 2016 Highlights Revenues 58.8 bln Operating Margin Adj. 2.3 bln Capital Expenditures* 8.7 bln Production 1.76 Mboe/d Proved reserves 7.5 bln boe Organic RRR 193 % 2 * pro-forma, considering the sale of 40% of Zohr and Val d Agri effect

3 LNG business Portfolio Activity Results Equity Gas Supply (bcm) Liquefaction Capacity (bcm) Regas Capacity (bcm)* LNG Sales (bcm) LNG assets & flows 3 * regas capacity in US being converted into liquefaction capacity

4 Mozambique Area 4 Area 4 is a deep water block in the Rovuma Basin offshore Mozambique, originally covering 12,956 km² and reaching depths of 2,600 m Eni East Africa is the Operator of the block with a 70% working interest; the other partners ENH, Galp and KOGAS hold 10% each In March 2017 Eni announced the sale of a 35.7% stake in Eni East Africa to ExxonMobil. Following completion of the transaction*, Eni and ExxonMobil would each hold 35.7% in Eni East Africa and CNPC would retain its 28.6% stake. With about 85 TCF of estimated gas in place this is one of the largest gas discoveries in recent years and the largest in eni s history With the leadership of experienced IOCs and a solid upstream partnership, the Area 4 LNG projects will represent a key long-term reliable source of LNG TANZANIA Palma MOZAMBIQUE Pemba Area 4 Maputo 4 * The transaction remains subject to the satisfaction of a number of conditions precedent including clearance from Mozambican and other regulatory authorities.

5 LNG projects in Area 4 Project Outline Area 1 Area 4 MN-1 MNE-2 MNE-1 MNE-3 MS-3 MS-1 MS-2 CO-2 Agulha CO-4 dira CO-4 dir CO-1 CO-3 AG-1 dir. AG-2 Mamba Coral Discovery Area DU-1 exploration activities carried out: 14 wells drilled ~ 85 tcf GIIP discovered (40 tcf nonstraddling) Multiphase development of the gas discoveries, commencing with the initial phase of: Coral resources 1 FLNG unit with an expected production of 3.37 mtpa of LNG FID: 2017 Start-up: Mamba resources 2 on-shore trains with liquefaction capacity of 5 MTPA each, for a total of 10 mtpa Start-up: Potential to develop up to 50 MTPA 5

6 FLNG FOB deal SWOT Analysis An FOB deal with a single portfolio player for the whole production capacity of the FLNG represents the optimal solution to meet the Seller s objectives given the complexity of the project and the current conditions of the market Strengths Offtake of total project s capacity Low operational risk No investment in shipping No downstream Force Majeure No exposure to local end-user markets Weaknesses No access to potential upside of end-user markets Buyer to benefit from shipping optimisation margin Possible small loss of price premium Opportunities Facilitate meeting FID requirements Ensure operational reliability Maximize project financing Threats Top tank risk due to FOB sale Credit exposure on single buyer LNG potentially competing with other projects in the same block 6

7 FLNG FOB deal W/T Mitigations Weaknesses No access to potential upside of end-user markets Buyer to benefit from shipping optimisation margin Possible small loss of price premium Premium for FOB deliveries and capitalization on optimal geographical location allow to compensate for the possible loss of commercial upside Offtake and scheduling conditions to be structured in such a way as to retain control of production Threats Top tank risk due to FOB sale Credit exposure on single buyer Coral LNG potentially competing with other projects in the same block Creditworthy buyer with proven operational mid/downstream experience Ability to market additional volumes from same block without constraints in parallel with contracted FLNG FOB volumes 7

8 conclusions An FOB sale presents some important advantages and is not necessarily commercially unfavourable For an FLNG project, selling the whole production to one buyer allows to capitalize on the advantages of an FOB sale Some weaknesses of the sale structure can be mitigated through the negotiations but they need to be identified and recognized from the start In the case of Mozambique, considering the market conditions and the strategic value of Coral South FLNG as the enabler for future LNG developments in Mozambique, this was certainly the optimal solution 8