REUTERS / Anne Kat Brevik Global LNG Market dynamics, key trends and market outlook December 14, 217
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
$/MMBtu The northeast Asian LNG spot price at three years high 2 18 JCC Indexed 16 14 NE Asian Spot Price 12 1 8 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
Bcm/Month New supply projects ramping up Australia, the U.S. & Russia 6 5 216 217 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
Strong demand growth absorbing additional supply BCM 14 216 China 217est 12 1 China 8 6 4 2 S Korea India Pakistan Thailand Egypt S Korea Pakistan India Thailand Egypt -2 Source: TR
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 2 18 16 14 2,5 12 2 1 1,5 8 1 6 4,5 2 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Source: ICE, TR
Bcm/Year Rapid growth in LNG production capacity! (Projects post FID*) 55 5 45 4 35 3 25 2 15 1 5 Supply increase of 1bcm: 218-22 21 211 212 213 214 215 216 217 218 219 22 221 222 * 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
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
Bcm/Month U.S. Exports by destination northeast Asia catching the lion s share 216 217 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
Bcm/Year The U.S. Existing projects and under construction 8 Corpus Christi 6 4 Freeport Elba Island Cameron 216-222 The US adding ~9bcma capacity 2 Dominion Cove Point Sabine Pass 216 217 218 219 22 221 222 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)
U.S. LNG cash cost matters for existing projects Costs for exports to northwest Europe $/MMBtu Sunk cost 8 7 6 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 3 2 1 Fixed Liquefaction Fee Shipping All shipping costs round voyage All Costs Full Cash Costs Source: TR
Varying cash cost for U.S. LNG to NW Europe $/MMBtu Cash-cost range: $3.8-4.9/MMBtu 6 5 4 3 2 1 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
Varying cash cost for U.S. LNG to Japan $/MMBtu Cash-cost range: $4.1-4.9/MMBtu 6 5 Liquefaction - variable Cheniere SPAs: 15% of HH 4 3 2 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
$/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 16 14 12 1 8 6 4 2 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
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
Bcm/y Growing thirst for LNG to China 6 5,5 Monthly LNG Imports 5 4,5 4 3,5 3 2,5 2 1,5 1 212 213 214 215 216 217 Source: Chinese Customs
China natural gas infrastructure Monthly LNG Imports
Bcm/y Chinese imports LNG and pipeline gas 9 8 Total pipeline and LNG imports 7 6 5 4 3 2 1 Pipeline imports* LNG Imports 26 27 28 29 21 211 212 213 214 215 216 217e * From Central Asia and Myanmar
Bcm/y China natural gas consumption & forecasts 36 32 28 24 2 Annual % consumption growth (right axis) 5 % 45 % 4 % 35 % 3 % 25 % 16 2 % 12 8 4 21 22 23 Natural Gas Consumption 24 25 26 27 28 29 21 211 212 213 214 215 216 217e 218 219 22 221 222 15 % 1 % 5 % % Source: BP, IEA, NDRC, CNPC
Bcm/y China natural gas consumption & forecasts 36 32 28 24 2 Annual % consumption growth (right axis) FYP 1% share FYP 8.3% share IEA 22 IEA 222 5 % 45 % 4 % 35 % 3 % 25 % 16 2 % 12 8 4 21 22 23 Natural Gas Consumption 24 25 26 27 28 29 21 211 212 213 214 215 216 217e 218 219 22 221 222 15 % 1 % 5 % % Source: BP, IEA, NDRC, CNPC
Bcm/y China natural gas production & forecasts 4 % 22 2 35 % 18 3 % 16 14 12 Annual production growth (right axis) 25 % 2 % 1 8 15 % 6 4 2 21 22 23 Domestic Gas Production 24 25 26 27 28 29 21 211 212 213 214 215 216 217e 218 219 22 221 222 1 % 5 % % Source: BP, IEA, NDRC, CNPC
Bcm/y China natural gas production & forecasts 22 2 18 16 14 12 1 8 6 4 2 Annual production growth (right axis) 21 22 23 Domestic Gas Production 24 25 26 27 28 29 21 211 212 213 CNPC, produciton capacity FYP IEA 22 214 215 216 217e 218 219 22 221 222 IEA 222 4 % 35 % 3 % 25 % 2 % 15 % 1 % 5 % % Source: BP, IEA, NDRC, CNPC
Bcm/y China forecasting import requirement Applying IEA s estimates for domestic production and consumption 4 35 3 Consumption 25 2 15 1 5 Domestic Production -5-1 -15 26 27 28 29 21 211 212 213 214 215 216 217 218 219 Net Imports 22 221 222-2 Source: BP, IEA, NDRC
Bcm/y China forecasting import requirement Comparing IEA s estimates with targets in the 13 th FYP 4 35 3 25 2 FYP consumption, 1% share FYP consumption, 8.3% share Consumption IEA FYP production 15 1 5 Domestic Production IEA -5-1 -15 26 27 28 29 21 211 212 213 214 215 216 Net Imports IEA 217 218 219 22 221 222 FYP imports, 8.3% share FYP imports, 1% share -2 Source: BP, IEA, NDRC
Bcm/y China LNG import scenarios* 16 Extrapolation of supply/ demand growth rates 14 12 FYP, 1% share scenario 1 8 IEA Forecast 222 6 4 2 FYP, 8.3% share scenario Extrapolation of supply/ demand growth rates * Pipeline imports assumed similar for all scenarios, 22: 5bcm, 222: 65bcm 212 213 214 215 216 217 218 219 22 221 222 Source: BP, IEA, NDRC, Chinese Customs
Bcm/y China LNG import scenarios* 16 Extrapolation of supply/ demand growth rates 14 12 1 8 FYP, 1% share scenario TR IEA Forecast 222 6 4 2 FYP, 8.3% share scenario Extrapolation of supply/ demand growth rates * Pipeline imports assumed similar for all scenarios, 22: 5bcm, 222: 65bcm 212 213 214 215 216 217 218 219 22 221 222 Source: BP, IEA, NDRC, Chinese Customs
REUTERS / Anne Kat Brevik Thank you for the attention! December 14, 217