LNG Opportunities. An Oil Search Perspective. PNG Chamber of Mines and Petroleum 28 November Oil Search Limited ARBN

Transcription

1 LNG Opportunities An Oil Search Perspective PNG Chamber of Mines and Petroleum 28 November 2017 Oil Search Limited ARBN

2 Strong long-term global LNG market fundamentals ASIAN DEMAND (MTPA) Source: FGE Online Data System - August 2017 Whilst oil prices continue to be depressed, the future of LNG is bright with strong market fundamentals LNG importing countries/lng buyers expected to grow to >100 by 2020: Strong demand growth in Asian markets (1H16-1H17): China (+37%), South Korea (+14%), Taiwan (+12%), Japan (+9%) Global demand expected to reach >460 MTPA by 2030 Key North Asian markets prioritising LNG over coal and nuclear. >70 MTPA of contracts expected to expire between LNG usage expanding (eg merchant shipping) FSRUs supporting demand growth, enabling faster delivery to markets Rapidly changing and dynamic LNG market 2

3 MTPA Market for global LNG supply from 2023, possibly earlier GLOBAL LNG SUPPLY DEMAND BALANCE Operational LNG Projects Under Construction LNG Projects Global LNG Demand Source: WoodMac June 2017 New supply required 2023 and possibly earlier on seasonal basis Entering into period when LNG capacity exceeds demand However, only 7.2 MTPA of new LNG capacity sanctioned in 2016 and 2017 Window of opening demand in early/mid 20 s and potentially moving earlier LNG expansion from PNG ideally placed to secure premium Asian buyers Geographical proximity and competitive cost brownfield expansion High heating value gas PNG represents geographical supply diversification 3

4 With collaboration significant future investment in gas exploration and appraisal possible Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 P nyang South 2 Gas exploration* Oil exploration* Gas exploration* Drilling Muruk 2 Gas exploration* Gas appraisal* Gas exploration* Gas appraisal* Kimu 2 Barikewa 3 Oil exploration* Gas exploration* Oil exploration* Expln 1* Uramu 2* Eastern Fold Belt (Phase 1) PPL339* Eastern Fold Belt (Phase 2)* Seismic Greater Juha (Phase 1) Iehi / Gobe FW* Kimu / Barikewa* Greater Juha (Phase 2)* Mananda* Deepwater 3D* Airborne GoP AGG + magnetics * Contingent 4

5 Robust platform for future LNG projects P nyang (>3.5tcf 2C, ~1.1tcf 1C) Kimu Juha On-trend prospects Barikewa Muruk Hides Kutubu Gobe Uramu Elk-Antelope (>6.5tcf 2C, ~5.2tcf 1C) >10 tcf undeveloped gas from Elk-Antelope and P nyang plus potential additional low cost gas from Foundation Project fields Gas from these fields able to feed >8 MTPA of LNG capacity Longer term production optionality from the Muruk discovery with potentially 1-3 Tcf, (subject to appraisal) circa 21km from existing infrastructure Potential for circa 1 to 1.5 Tcf from Kimu, Barikewa and Uramu, subject to appraisal 5

6 Opportunity for LNG expansion to capitalise on material synergy benefits Sharing of utilities, power generation, metering, controls Reduction of overall tank storage requirements Construction of spur instead of new jetty & sharing of shipping channel Infrastructure (laydown, roads, camps, buildings) Savings on site preparation and surveys Sharing of flare LNG project advantage gained through competitive cost of supply PNG projects have a massive opportunity OSL estimates $2-3bn in capital savings and >$125M in annual opex savings 6

7 LNG Expansion projects can kick-start material in-country investment in the near term Major New Investment (multi-billion Kina) FEED and Early Works FID Construction Start-up Entry into FEED on expansion projects signals the start of major in-country investment Quality investors ready to spend billions of Kina in the coming years In-country investment in expansion creates jobs, potential long-term capability build through national content and long term GDP growth for the country Early works on the ground (Job creation from construction) Major investment flowing into PNG GDP growth as per the base project FX support with the flow of funds into PNG 7

8 PNG gas used to sustainably power PNG Source: ANZ Powering PNG into the Asian Century Power underpins activities which raise the living standards - Health, Education, Safety Fundamental to development, economic growth Port Moresby Power Station will provide materially lower cost of electricity than other thermal generation in PNG Using gas enables government s sulphur and greenhouse gas reduction strategies Oil Search and Kumul have created a capable PNG owned power generator ( NiuPower ) NiuPower s Port Moresby Power Station is a great start providing lowest cost reliable electricity Additional effort now required to implement consumer connections to support the goals of the medium term development plan 8

9 Sustainable and balanced approach to domestic gas and LNG an opportunity for future growth Gas provides clean, scalable and capitally efficient energy Provides initial market scale for larger renewable projects in future Domestic gas may provide competition with imported fuels and provide alternative to dirty heavy sulphur fuel oils Needs of the country must be balanced with project viability for developers Thoughtful policy, industry collaboration and smart partnering required NiuEnergy (OSL and Kumul) looking for sustainable options 9

10 LNG opportunities realised through collaboration and partnership between industry and country LNG opportunities are capable of driving economy and underpinning growth for PNG over the next 20+ years Ability to double production Very strong resource discovered base 2 world class operators and good local company partnership Good platform of infrastructure Potential to sustainably use PNG s gas for power Very competitive market, low oil and gas prices but PNG likely competitive Key to delivery is through collaboration. Industry and government must balance the needs of the country with stable and sustainable policy and investment environment Industry must bring Government, Landowners and country along Fair value for all Participation in key country development agenda 10

11 Thank you Oil Search Limited ARBN