Emergence of Unconventional LNG and its Implications for LNG Buyers in Asia-Pacific

Transcription

1 Northeast Asia Petroleum Forum 2011 Emergence of Unconventional LNG and its Implications for LNG Buyers in Asia-Pacific October 19th, 2011 Kunio Nohata Senior General Manager Gas Resources Dept. Tokyo Gas Co., Ltd. * All rights reserved.

2 Presentation Contents The LNG Market in Japan Latest trends of Unconventional Gas Impact of Unconventional Gas on the Asia- Pacific Market 2

3 LNG Imports to Japan by Company (FY2010) Gas companies Electric power companies Unit: Million tons Japan total (70.6) Import shares of electric/ 電力 / gas ガスの受入比率 companies (FY2010) (10 年度 ) 37.7% Osaka (8.2) Kansai (4.8) Toho (3.0) Chubu (10.4) Sendai Tohoku (3.0) 62.3% 電力会社ガス会社 Electric power companies Gas companies Kyushu (2.7) Saibu Chugoku (1.8) Hiroshima Shizuoka Nihon Tokyo Gas & TEPCO first imported LNG to Japan in 1969 Tokyo Gas (11.3) TEPCO (20.8) 3 Source: Trade statistics, FEPC, Sekitsu, etc.

4 LNG Imports to Japan by Country (FY2010) Imports from various countries centered on the Pacific Rim region (i.e. Malaysia, Australia and Indonesia) Imports from Middle East countries limited to 20% (10% for Gas companies) Japanese LNG Imports by Country (FY2010) (Ref.) The Middle East accounts for about 90% of all petroleum imports 1 21% 19% 18% 11% 8% 8% 7%7% 0% 20% 40% 60% 80% 100% 4 Malaysia Australia Indonesia Qatar Russia Brunei Abu Dhabi Others 出典 : 貿易統計

5 Changes in Japanese LNG Demand after the Earthquake Disaster (Million tons) (Million tons) CY2010 CY2011 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec CY2010 CY2011 Tokyo Gas LNG Imports Gas Companies LNG Imports Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5 Increased gas demand for CGS and electric power generation Gas demand for automobile and other manufacturing declined with supply chain confusion, etc., but has been gradually recovering Declining trend in residential and commercial sector use with stronger energy conservation awareness during the summer Basically flat on year-on-year basis

6 Changes in Japanese LNG Demand after the Earthquake Disaster (Million tons) 6.0 Electric Power Companies LNG Imports CY2010 CY2011 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Large increase in LNG consumption volume with the suspension of nuclear power operations As operations at existing nuclear power plants are suspended for periodic inspections, future demand will fluctuate greatly depending on when plants go back on line after stress tests 6

7 bcm LNG Demand Outlook for Tokyo Gas <Tokyo Gas supply plan (prior to the disaster) > Potential increase in demand Hitachi LNG Terminal (planned) 2015~ Annual growth rate of approx. 3% between FY2010 and FY2015 Ohgishima LNG Terminal Negishi LNG Terminal Kashima PL (under construction) 2012~ Sodegaura LNG Terminal (Actual) (FY) Kashima PL 2012~ Hitachi LNG Terminal 2015~ Reinforcement of infrastructure to expand LNG demand * All rights reserved. 7

8 (MTPA) LNG Demand Outlook for Japan? ハイケース High Demand Case ローケース Low Demand Case Source: The IEEJ (Prior to the disaster) While gas companies had assumed an increase in LNG demand prior to the earthquake disaster, the outlook is for an even larger increase from expansion in demand for CGS and gas air conditioning. Electric power companies had projected declining LNG demand from a shift to nuclear power prior to the earthquake disaster, but LNG demand will greatly increase in the short term. Long-term demand will fluctuate widely depending on Japan s nuclear power and energy policies.

9 LNG Supply and Demand Outlook for Asian and Middle Eastern Markets (Prior to the Disaster) (MTPA) Supply(Branded LNG) Supply(Pre-FID[Middle East and others]) Supply(Pre-FID[Asia Pacific]) SUpply(SPA concluded[middle East and others]) Supply(SPA concluded[asia Pacific]) Demand(High Demand Case) Demand(Low Demand Case) Short-term effects of the disaster: approximately 9~ 12 MTPA Sufficient supply secured * All rights reserved. 9 Source: The IEEJ

10 Global Natural Gas Trade and Regions (2010) Price-setting Formula Europe Asia North America Crude oil & petroleum products prices a+b ( a constant) Each hub price +c (a constant) Crude oil price a+b (a constant) Henry Hub price+c (a constant) Pipelines LNG Was linked to the price of crude oil & petroleum products, but the volume of hub price gas spot trading increased from the late 1990s centered on the U.K., and from 2010 some hub prices are reflected in pipeline prices. No competition with pipeline gas prices; LNG price linked to the price of crude oil. 10 Different price movement than crude oil prices. Pricing depends on the natural gas (pipeline) supply and demand. The prices shot up higher than crude oil prices in 2006 from a tight supply-demand balance, but have since remained low with progress in shale gas development.

11 ト ル $/mmbtu ト ル $/barrel / バレル World Natural Gas Prices Reference: 1 mmbtu 1,055 MJ 1 barrel kl 6,074 MJ (crude oil) Russia ロシア Europe 欧州 (PL) Crude 原油 oil (JCC) Japan 日本 アジア & Asia (LNG) 英国 U.K. (NBP) 18 0 U.S.A. 米国 (Henry ( ヘンリーハフ Hub) ) Shale gas revolution, Lehman crisis, etc. 0 CL01 CL02 CL03 CL04 CL05 CL06 CL07 CL08 CL09 CL10 CL11 11 Source: WGI, Trade Statistics of Japan

12 Presentation Contents The LNG Market in Japan Latest trends of Unconventional Gas Impact of Unconventional Gas on the Asia- Pacific Market 12

13 Natural Gas Resources Proved reserves Approximately 4 times Conventional + unconventional recoverable resources Unconventional 非在来型ガス gas tcm 兆 m3 シェールガス Shale gas 204 兆 tcm m3 CBM CBM 118 兆 tcm m3 Recoverable 回収可能な resources total 埋蔵量計 810 tcm (able 810 to 兆 cover m3 ( years 年分 demands) に相当 ) タイトガス Tight gas 兆 tcm m3 Proved 従来の reserves 確認埋蔵量 187 tcm 187 兆 m3 Conventional 在来型ガス gas 兆 m3 tcm Source: IEA World Energy Outlook 2010 and 2011 (Are we entering a golden age of gas?) ; BP Statistics 2010 ; EIA Shale Gas and the U.S. Energy Outlook 13

14 Global Unconventional Gas Distribution Europe China North America Argentina South Africa Australia Source: NPC 2007 Presence of major oil companies ( Majors ) 14

15 U.S. Gas Production and LNG Imports Outlook Domestic Gas Production Outlook [100 million m3] [10,000 tons] 7,500 7,000 7, assumptions 6,000 LNG Imports Outlook 2008 assumptions 6,500 6,000 5, assumptions 5,000 4,500 4,000 5,000 4,000 3,000 2,000 1, assumptions Large upwards revision in U.S. domestic gas production outlook, mostly from increased shale gas and other unconventional gas production (Unconventional gas production share increase from 54% at present to 73% in 2030). Large downwards revision in LNG imports outlook along with increased domestic gas production. Actual results through Source: EIA Annual Energy Outlook

16 Participation in Canadian Shale Gas Development Cordova Embayment Possibilities to export shale gas to Japan as LNG from Canada and the U.S. * All rights reserved. 16

17 North America LNG Export Plan Multiple projects are being advanced to liquefy North American natural gas and export it to Asia and Europe. Kitimat (Canada) Apache (GN, KOGAS, MC) 10 MTPA; to begin supply in 2015 Shell (Canada) Partner (CNPC, KOGAS, MC) Sabin Pass (Louisiana, U.S.; in operation as an LNG receiving terminal) Free Port (Texas, U.S.; in operation as an LNG receiving terminal) Kitmat Free Port Sabin Pass * The U.S. was only allowing gas exports to countries that have an FTA with the U.S., but Sabin Pass received permission for exports on May

18 Expansion of the Panama Canal A wide canal parallel to the existing canal is scheduled to be built by August 2014 The new canal will accommodate passage of LNG carriers and other large vessels (up to 366m length, 49m width, 15m draft) Vessels will no longer have to travel around the Cape of Good Hope, Africa 18

19 Participation in CBM-LNG Projects in Australia Several CBM-LNG export projects are currently underway in Queensland. Potential production volume of 50 MTPA after SPA for Queensland Curtis LNG with BG Group plc. (March 2011) Tokyo Gas is the first Japanese CBM-LNG buyer. * All rights reserved. 19 Source: Wood Mackenzie, JOGMEC

20 CBM-LNG Projects in Australia Ownership QC LNG BG 93.75%, CNOOC 5%, TG 1.25% GLNG Santos 30%, Petronas 27.5%, Total 27.5%, Kogas 15% Scheduled start of operations Capacity (MTPA) AP LNG CoP 42.5%, Origin 42.5%, Sinopec 15% Arrow Energy LNG Shell 50%, PetroChina 50% Fisherman s Landing LNG Ltd 100%

21 Shale Gas in China Top 5 countries possessing technically recoverable reserves Jungar Basin Tuha Basin Songliao Basin Tarim region Ordos Basin Huabei Bohaiwan China U.S. Argentina Mexico South Africa South region China has recoverable reserves (in Sichuan and the Tarim Basin) of 1,275 tcf (36 tcm), surpassing those in North America 21

22 Presentation Contents The LNG Market in Japan Latest Trends of Unconventional Gas Impact of Unconventional Gas on the Asia- Pacific Market 22

23 Impact of Unconventional Gas on the Asia-Pacific Market Progress of shale gas and CBM development in East Asia Start-up of many CMB projects in Australia Large role in easing the supply-demand balance in the Asia-Pacific market 23

24 Impact of Unconventional Gas on the Asia-Pacific Market North American shale gas LNG export plan Impact on traditional LNG price in the Asia-Pacific market Enhancement of liquidity in the spot market 24

25 New Natural Gas Projects in the Asia-Pacific Region Irkutsk Qatar&Expansion Turkmenistan Alaska North Slope Sakhalin I Sakhalin II North American shale gas Alaska Kenai Abu Dhabi Persian, Pars, Iran Iran Oman, Qalhat Yemen Arun Malaysia I, II, III NWS Wheatstone Pluto Gorgon Natuna Brunei Badak Sulawesi/Donggi Tangguh PNG LNG Masela Abadi Greater Sunrise Darwin Browse, Ichthys Existing LNG New & Expansion QCLNG, APLNG, GladstoneLNG

26 Future East Asian Market Declines in reserves and increases in domestic gas consumption in Malaysia, Brunei and other countries High cost of new LNG projects in Australia, etc. Efforts to change the structure of the Asian market Single framework among East Asian buyers (Both conventional gas and unconventional gas) Efforts by Asian buyers to break the Asia premium Share of risks and returns Forming a price downtrend by taking on new challenges 26

27 The Energy Horizon (new LNG carrier christened July 6) Thank you for your kind attention. 27