Gas Commercialisation Update - May 2007

Transcription

1 Gas Commercialisation Update - May 2007

2 LNG for PNG Major growth in global LNG market and strong increase in gas prices over past 2 years makes LNG in PNG attractive Unprecedented interest from range of LNG developers PNG has all the requirements for LNG development: Discovered reserve base plus upside Existing infrastructure base Excellent location to exploit strong Asian markets Stable fiscal regime

3 P nyang Juha Angore Mogulu Existing gas fields, gas exploration and appraisal opportunities Korobosea Kimu Iehi Barikewa Uramu Pandora

4 Gas Resources (Gross PNG) Recoverable Gas (bcf) 30,000 25,000 20,000 15,000 10,000 5,000 Recoverable Gas (bcf) Yet to Find Elevala Ketu Pandora Uramu Kimu Barikewa P'nyang Angore Juha Hides SE Gobe Gobe Main Moran 0 1P 2P 3P Agogo SE Mananda Kutubu Current 3P gas resources approximately 25 tcf Yet to Find potential a further 25 tcf from multiple basins (estimate only) Maturing the resource ahead of market demand will require a prudent mix of appraisal and exploration

5 Gas/LNG Prices Have Risen for Five Distinct Reasons: 1. Higher oil prices mean higher natural gas prices directionally, though gas prices are capped by competition from coal and nuclear at the burner tip, especially in the longer term. 2. Construction costs have risen significantly! 3. The United States has entered the LNG market from virtually zero early in the decade, and is very likely going to become the second largest LNG importer next to Japan after Japan will continue to be the largest importer of LNG through Indonesia, once the world s largest LNG exporter, is heading for a decline of exports to nearly zero (except for Tangguh) due to a combination of resource problems and political pressure to divert resources to the domestic market. 5. Qatar holds most of the cards in the near term and they know it! Source: FACTS Global Energy

6 LNG Supply Becomes More Fluid mtpa Contracted LNG Supplies in the World Portfolio SPA Actors are becoming increasingly integrated on the supply chain. Historical roles of seller or buyer are fading away in the Atlantic Basin. Flexible portfolio LNG accounts for 1/3 of LNG supplies in the Atlantic Basin and nearly 1/4 of global LNG contracted supplies known for These volumes can easily be diverted to alternative markets. Source: FACTS Global Energy

7 Interactions Between East and West: The Implications for Trade and Prices Atlantic Basin Middle East New supplies from Asia Pacific can move in 2 directions within Asia and to the US West Coast Supplies from the Middle East can go in 3 directions USGC and East Coast, Europe/UK, and Asia Asia Pacific Basin Source: FACTS Global Energy

8 Three Distinct in LNG Pricing Phase 1 Legacy Contract Phase Seller s market Significant link to oil prices Korea/Taiwan ~$10/mmbtu Japan US$7.40 US$8.80 Most expire Lasted through 2001 Phase 2 Low Price Phase Buyer s market Lower linkage to oil price, with larger buyer flexibility NWS to China, Tangguh to Fujian, Oman to Osaka Gas etc. ~US$3.00/mmbtu Lasted through 2005 Phase 3 - Tight Energy Market Phase Return to seller s market Significant oil price linkages NWS sales to Japan ~US$8/mmbtu Qatar Spot US$11/mmbtu Henry Hub ~US$6-7/mmbtu, with market arbitrage Source: FACTS Global Energy

9 Jan-06 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 US Oil & Gas Price Convergence Prices of Natural Gas (HH) Versus Selected Products Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-92 US$/boe HH Gasoil Fuel oil Jan-90 Jan-91

10 NE Asia LNG Price Trend Average LNG Price in Northeast Asia Sep-95 Mar-96 Sep-96 Mar-97 Sep-97 Mar-98 Sep-98 Mar-99 Sep-99 Mar-00 Sep-00 Mar-01 Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-95 Sep-94 $/mmbtu Minimum-Maximum Price Range Average Northeast Asia Price Sep-92 Mar-93 Sep-93 Mar-94

11 Comparative LNG Pricing LNG ($/mmbtu) Crude Oil Parity 8 NWS Recent Contracting 6 4 NWS Traditional Contracting JCC ($/b) Source: FACTS Global Energy

12 The LNG Chain Gas Supply Gas Conditioning Liquefaction LNG Plant Transportation Regasification Regasification Transmission Distribution Consumers Market

13 Indicative Shipping Costs US$ US$ US$ US$ Based on 145,000m 3 vessels chartered at $60-70,000/day

14 LNG for PNG Competition to develop first plant Several development approaches being reviewed and matured ExxonMobil model - total value chain approach upstream, pipeline, plant, marketing/shipping Merchant plant approach specialist developer purchases gas from fields Combination of both, with multiple trains OSH reviewing merits of different approaches, driving competition

15 Key Fields Hides / Angore Fields (OSH 27.5%) ~ 6.5 tcf of Proven and Probable resource Kutubu Complex Fields (OSH %) ~ 1.5 tcf plus liquids, largely developed Key strategic resource and infrastructure hub, high value Juha Field (OSH 31.5%) Post Juha 5 resource ~ 0.8 tcf (2P) Potential upside to 2 tcf, dependent on Juha 4 Liquids rich Other fields include: Kimu 0.8 tcf (OSH 44.6%) Barikewa 0.8 tcf (OSH 42.5%) Uramu 0.4 tcf (OSH 49.6%)

16 LNG with ExxonMobil ExxonMobil review indicated a economically robust LNG project from Hides/Angore fields Economics are enhanced if other fields (Juha, Kutubu) included Cost sharing agreement to conduct feasibility study signed in April between Hides/Angore/Juha JVs. PDL 2 (Kutubu) has option to join studies Gross cost of studies US$60m. OSH share 32% / 37% if PDL 2 joins Studies will include reviewing optimum size project (range mtpa train), negotiation of fiscal terms, unitisation framework Capex dependent on train size total likely to be in range US$7bn - $10bn Target end 2007/early 2008 to enter FEED, end 2008 for FID, 2013 for first deliveries

17 Full Foldbelt 6.3Mtpa ExxonMobil LNG Option Estimated Capital Cost (US$bn): -Upstream& Pipeline 5.0 -LNG Plant 4.5 Total km 14-inch gas line Juha 250 mmscfd (nominal) Hides & Angore 960 mmscfd Conditioning Plant 8-inch condensate line Kutubu & Agogo Gobe Reserves Required (20 yrs): 7.7 tcf 311 km 32-inch Hides-Kopi pipeline Kopi Valve & Pigging Station ~300 km 32-inch subsea gas line to LNG Plant at Cape Possession Port Moresby

18 LNG for PNG OSH and BG have been working since mid-2006 on evaluating LNG development options. Studies have included: Resource base Capital costs for 3.5 mtpa initial train plus expansion Reviewing ideal project structure BG excellent potential partner with development track record and strong marketing capabilities Strategic fit for Asian customers

19 Liquefaction Plant Costs Greenfield Brownfield PC Phillips Cascade PNG ExxonMobil -To be Optimised Gorgon Pluto Estimate for Bechtel (BG) Yemen Olakola $/tpa QG 1 PC NLNG Base NLNG Trinidad Oman RG 1 MLNG Tiga NWS 4 Damietta Bontang H PC Trinidad PC PC PC Tangguh Darwin NLNG Egypt Trinidad PC Sakhalin Qalhat EG NLNG QG 2 RG 2 NLNG Gassi Touill QG 3 RG 3 NWS 5 PC Brass EPC Awarded

20 LNG for Oil Search OSH objectives: Number of credible development options with excellent partners Striving for early development certainty and best long term value Excellent position in all major fields with likely interest around 30% in any development Decision on options in next three months

21 Other Complementary Gas Activities Significant expansion of appraisal and exploration programme for gas, aimed at increasing contractable gas Juha wells Kimu Korobosea Barikewa Potential Juha development despite J-5 results, liquids cycling project as precursor to LNG still possible. Subject to resource delineation by J-4 well

22 PNG Exploration Juha NW Paua Oil exploration mmbbl net risked reserves being tested in 2007 Mogulu Mananda Attic Korobosea Kutubu, Arakubi Cobra Barikewa Gas - Co-ordinated programme to add reserves to support commercialisation projects PNG 2007 exploration budget up to US$120m net (firm) Continued seismic for gas and oil exploration/appraisal, in Highlands, Forelands and Offshore Offshore licencing round bid submitted in April 2007 Ongoing review of farm-in opportunities onshore and offshore

23 O I L S E A R C H L I M I T E D