Global LNG Market dynamics, key trends and market outlook

Transcription

1 REUTERS / Anne Kat Brevik Global LNG Market dynamics, key trends and market outlook December 14, 217

2 What to address Market dynamics, key trends and market outlook The role and outlook for U.S. LNG China s growing thirst for LNG 2

3 $/MMBtu The northeast Asian LNG spot price at three years high 2 18 JCC Indexed NE Asian Spot Price Brent Indexed 6 4 NBP Front month NBP Fwd 2 Henry Hub Front month Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 HH Fwd Source: ICE, TR

4 Bcm/Month New supply projects ramping up Australia, the U.S. & Russia Yamal LNG Wheatstone LNG 4 Gorgon LNG 3 Gladstone LNG 2 Australia Pacific LNG 1 Sabine Pass Jan Mar May July Sept Nov Jan Mar May July Sept Nov Source: TR

5 Strong demand growth absorbing additional supply BCM China 217est 12 1 China S Korea India Pakistan Thailand Egypt S Korea Pakistan India Thailand Egypt -2 Source: TR

6 Bcm//Month $/MMBtu LNG gross imports to northwest Europe the sink for surplus cargoes U.S. exports to northwest Europe less than.5bcm 4 3,5 3 NE Asian Spot Price UK Belgium Netherlands France , , ,5 2 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Source: ICE, TR

7 Bcm/Year Rapid growth in LNG production capacity! (Projects post FID*) Supply increase of 1bcm: * Further supply potential from: Qatar, Iran, East Med, Mozambique (FID taken for Coral FLNG), PNG, Malaysia, Canada, Alaska, the U.S., Russia Europe Americas Asia Pacific Africa Middle East

8 What to address Market dynamics, key trends and market outlook The role and outlook for U.S. LNG China s growing thirst for LNG 8

9 Bcm/Month U.S. Exports by destination northeast Asia catching the lion s share Destination Share 1,5 1,5 NE Asia 3% Mexico 21% Lat Am 17% Mid East 12% S Asia 5% NW Eur 2% S Eur & Med 12% Jan Mar May July Sept Nov Jan Mar May July Sept Dec Source: TR

10 Bcm/Year The U.S. Existing projects and under construction 8 Corpus Christi 6 4 Freeport Elba Island Cameron The US adding ~9bcma capacity 2 Dominion Cove Point Sabine Pass Projects soon to take FID? Sabine Pass Train 6, Freeport Train 4, Corpus Christi Train 3, Lake Charles 1, Golden Pass 1-3, Magnolia (Total of ~ 6 bcma)

11 U.S. LNG cash cost matters for existing projects Costs for exports to northwest Europe $/MMBtu Sunk cost Regas & market entry Shipping Liquefaction Cash cost matters Fixed Liquefaction Fee Sabine Pass: $2.25-3/MMBtu 5 4 Henry Hub Liquefaction - variable Cheniere SPAs: 15% of HH Fixed Liquefaction Fee Shipping All shipping costs round voyage All Costs Full Cash Costs Source: TR

12 Varying cash cost for U.S. LNG to NW Europe $/MMBtu Cash-cost range: $ /MMBtu Regas & market entry Shipping Liquefaction Henry Hub Full Cash Costs Min Cash Costs Liquefaction - variable Cheniere SPAs: 15% of HH Tolling contracts : 7-8% of HH Shipping For companies controlling own fleet, charter-cost regarded as sunk cost Regas and marekt entry For companies with regas capacity, most of this cost regarded as sunk Source: TR

13 Varying cash cost for U.S. LNG to Japan $/MMBtu Cash-cost range: $ /MMBtu 6 5 Liquefaction - variable Cheniere SPAs: 15% of HH Shipping Liquefaction Tolling contracts : 7-8% of HH Shipping For companies controlling own fleet charter-cost regarded as sunk cost 1 HHub Henry Hub Regas and market entry Assuming DES sales Full Cash Costs Min Cash Costs Source: TR

14 $/MMBtu U.S. exports will most likely stay competitive 2 18 HH expected to be delivered around $3/MMBtu Northeast Asia, Latin Am and Mexico the most attractive destinations NE Asian Spot Price NBP fm Henry Hub front month Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-2 NBP Fwd HH Fwd Source: ICE, TR

15 What to address Market dynamics, key trends and market outlook The role and outlook for U.S. LNG China s growing thirst for LNG 15

16 Bcm/y Growing thirst for LNG to China 6 5,5 Monthly LNG Imports 5 4,5 4 3,5 3 2,5 2 1, Source: Chinese Customs

17 China natural gas infrastructure Monthly LNG Imports

18 Bcm/y Chinese imports LNG and pipeline gas 9 8 Total pipeline and LNG imports Pipeline imports* LNG Imports e * From Central Asia and Myanmar

19 Bcm/y China natural gas consumption & forecasts Annual % consumption growth (right axis) 5 % 45 % 4 % 35 % 3 % 25 % 16 2 % Natural Gas Consumption e % 1 % 5 % % Source: BP, IEA, NDRC, CNPC

20 Bcm/y China natural gas consumption & forecasts Annual % consumption growth (right axis) FYP 1% share FYP 8.3% share IEA 22 IEA % 45 % 4 % 35 % 3 % 25 % 16 2 % Natural Gas Consumption e % 1 % 5 % % Source: BP, IEA, NDRC, CNPC

21 Bcm/y China natural gas production & forecasts 4 % % 18 3 % Annual production growth (right axis) 25 % 2 % % Domestic Gas Production e % 5 % % Source: BP, IEA, NDRC, CNPC

22 Bcm/y China natural gas production & forecasts Annual production growth (right axis) Domestic Gas Production CNPC, produciton capacity FYP IEA e IEA % 35 % 3 % 25 % 2 % 15 % 1 % 5 % % Source: BP, IEA, NDRC, CNPC

23 Bcm/y China forecasting import requirement Applying IEA s estimates for domestic production and consumption Consumption Domestic Production Net Imports Source: BP, IEA, NDRC

24 Bcm/y China forecasting import requirement Comparing IEA s estimates with targets in the 13 th FYP FYP consumption, 1% share FYP consumption, 8.3% share Consumption IEA FYP production Domestic Production IEA Net Imports IEA FYP imports, 8.3% share FYP imports, 1% share -2 Source: BP, IEA, NDRC

25 Bcm/y China LNG import scenarios* 16 Extrapolation of supply/ demand growth rates FYP, 1% share scenario 1 8 IEA Forecast FYP, 8.3% share scenario Extrapolation of supply/ demand growth rates * Pipeline imports assumed similar for all scenarios, 22: 5bcm, 222: 65bcm Source: BP, IEA, NDRC, Chinese Customs

26 Bcm/y China LNG import scenarios* 16 Extrapolation of supply/ demand growth rates FYP, 1% share scenario TR IEA Forecast FYP, 8.3% share scenario Extrapolation of supply/ demand growth rates * Pipeline imports assumed similar for all scenarios, 22: 5bcm, 222: 65bcm Source: BP, IEA, NDRC, Chinese Customs

27 REUTERS / Anne Kat Brevik Thank you for the attention! December 14, 217