Small Scale to large Market Strategies & Technologies towards the Mediterranean Area "La logistica primaria per la distribuzione del GNL" OLT Offshore LNG Toscana Alessandro Fino CEO 1
OLT Shareholders UNIPER Global Commodities SE (48.24%) One of the largest energy groups in the world with entirely private capital, listed on the Frankfurt Stock Exchange IREN Group (49.07%) IREN Group is listed on the Italian Stock Exchange and was founded in July 2010 from the merger between IRIDE and ENIA - 49,07% (including 2,28% shares of ASA) Golar LNG (2.69%) Golar LNG is an LNG shipping company, belonging to the Fredriksen Group (owner of the largest oil tanker fleet in the world), engaged in the acquisition, ownership, operation and chartering of LNG carriers and FSRUs 2
FSRU Toscana milestones Conversion of the LNG carrier 'Golar Frost' H1444 into the floating storage and regasification unit FSRU Toscana, moored 12 nautical miles offshore the Tuscany coast, (sea depth of 120 m), connected to the existing national gas grid through a pipeline, operated by Snam Rete Gas S.p.A; The Terminal arrived offshore Livorno at the end of July 2013 and entered into commercial operation on 20 th December 2013; Terminal is completely self-sufficient and has the same operational features as typical onshore regasification terminals; Equipped with a Wobbe Index corrector installed on board that can allow to receive almost all the LNG produced in the world; 95% of weather availability: during the last two operational years 87% of the slots were suitable for StS operations without any delay. 8% of the slots with a delay of no more than 2 days from the Arrival Window scheduled for the relevant slot, and without any impact on the following scheduled delivery slots. Golar Frost Wobbe Index Corrector Unloading arms Single point mooring Regasification plant 3
High flexibility as Italian regulated LNG Terminal FSRU Toscana Regasification Terminal is fully regulated and was declared by MSE decree as essential Italian infrastructure, therefore a transparent and not discriminatory TPA is offered; TPA process is in compliance with all the relevant rules defined by the Italian Regulatory Authority for Electricity, Gas and Water (AEEGSI) - Resolution 167/05 according to criteria set forth in DL 164/00; An annual capacity of 6,356,250 Liq m 3 (equivalent to 3.75 bm 3 regasified GN) is offered with a maximum associated number of Delivery Slots equal to 41. On average 1 slot every 8.5 days is scheduled; Annual and multiannual ( 5 years) capacity is offered in May each year before the Annual Unloading Schedule process takes place. Following such process the capacity is offered as Delivery Slot on rolling basis; Send out flow rate with high flexibility, from a minimum send out, up to 15 MSm 3 /d can provide the users with high trading value. Such flexibility can be used to recover cargo delays or adverse weather conditions in order to nominate quantities out of the Terminal upon trading needs; The Terminal is allowed to receive approximately 90% of the current LNG carrier fleet with a cargo capacity from 65.000 to around 180.000 m 3 (New Panamax class); the list of the LNG carriers already approved is available on the OLT website (currently around 70 LNG carriers). 4
European Security of Supply A key part of ensuring secure and affordable supplies of energy to Europeans involves diversifying supply routes. This includes identifying and building new routes that decrease the dependence of EU countries on a single supplier of natural gas and other energy resources. Development and increasing of gas grid connections between European countries (counter flow). Create a Mediterranean gas hub in the South of Europe to help diversify its energy suppliers and routes. LNG imported to Europe through LNG terminals is a source of diversification that contributes to competition in the gas market and security of supply. 5
Italian Security of Supply services 1. Peak Shaving Service Since the start of operation OLT has offered the Peak Shaving service, one of the emergency measures established by Decree of the Ministry of Economic Development within the Emergency Plan to face unfavorable events for the national gas system. In case of peak demand, at very short notice, the LNG terminals regasify and send into the national grid the LNG previously stored in the tanks. Peak shaving scheme: Peak Shaving Tender LNG stored on board CRISIS MEASURES ACTIVATED LNG regasified Peak Shaving Supplier The winner discharges LNG into FSRU Toscana WINTER 2013 2014 50,000 m 3 of LNG owned by OLT after commissioning CRISIS MEASURES NOT ACTIVATED 2014 2015 Awarded 100,000 m 3 of LNG 2016 2017 Peak Shaving Supplier APRIL 2015 2016 Awarded 97,000 m 3 of LNG Awarded 105.000 m 3 of LNG -1 st LNG cargo in Italy from USA 6
Italian Security of Supply services 2. Bundled service During the first quarter of 2016, Italy adopted another important measure for the security of supply, the bundled service of the national storage system, managed by STOGIT and all the national LNG Terminals. The aim of this service is to offer the regasification service during the spring/summer seasons to benefit from the lower prices of the LNG market and to start to fill the Italian storage system for the winter season with the regasified LNG. Bundled service scheme: Bundled service Tender LNG regasified NG stored in the national storage system Suppliers The winners discharge LNG into FSRU Toscana SPRING-SUMMER Bundled Service 2016 2017 1,000,000,000 m 3 NG auctioned; awarded capacity by OLT 440,000,000 m 3 equivalent to 5 delivery slots between June and August 1 st LNG cargo in Italy from Perù WINTER Bundled Service 2017 2018 1,500,000,000 m 3 NG auctioned; The II tender for the storage Gas Year 2017/2018 is ongoing 7
ECA Emission Control Areas IMO MARPOL ANNEX VI confirmed the limit of So x worldwide at 0,5% from 2020 and in the ECA areas at 0,1% from 2015. North America coasts, North Sea and Baltic are ECAs. Mediterranean Sea, Norwegian coasts, Caribbean and Mexico coasts, Singapore and Japanese Coasts are potential ECAs under discussion. 8
SSLNG: Key Factors in the Logistic Model REGASIFICATION TERMINALS TRANSPORT END USERS Mini LNG carriers (1000-30000 m 3 ) Bunker barges (400-1000 m 3 ) Transport Industrial or civil facilities The main infrastructures onshore and offshore can receive the LNG carriers from the suppliers Trucks/Trains/ISO containers (50-80 m 3 ) LNG terminals 9
European Union policies The Directive 2014/94/EU (DAFI) of the European Parliament and of the Council of 22 October 2014 requires Member States to develop national policy frameworks for the market development of alternative fuels and their infrastructure; foresees the use of common technical specifications for recharging and refueling stations; paves the way for setting up appropriate consumer information on alternative fuels, including a clear and sound price comparison methodology. The required coverage and the timing by which this coverage must be put in place is as follows: Following a public consultation process started in 2015, the Italian Government implemented the Directive 2014/94/EU (DAFI) with the Legislative Decree n. 257, approved on 16 th December 2016. This latter includes the National Plan for the use of LNG in Italy, providing the guidelines for the development of sector regulations. The target is to build 5 LNG sea bunkering stations by 2020 and to reach the number of 10 by 2025. 10
Transposition of Italian DAFI Directive AEEGSI Resolution n. 141 of 16 th March envisages some important rules regarding SSLNG services: SSLNG is not a regulated activity (less LNG storages supplying the gas pipeline in Sardinia) SSLNG activities may affect the regulated Regasification activities therefore the AEEGSI will define rules to avoid any interferences; Rules on accounting separation between Regasification and SSLNG activities will be defined. As Italian Mediterranean LNG infrastructure, OLT is working to be able to successfully achieve the challenges of the next future and as first link of the logistic chain of the Small Scale LNG business is committed to work in cooperation with the Italian institution in providing the services that LNG terminals are already providing in the North sea and in the Baltic sea. The main arguments that can have an high impact on the development of the SSLNG market: Authorization Process Support to isolated and not methanised areas Fiscal treatment Unbundling for regulated infrastructures FSRU Toscana loading operation spring 2017 11
SSLNG: Key Factors in the Logistic Model KEY FACTORS WITH SSLNG LNG Pricing vs Availability of alternatives MARKET LNG DEMAND GROWTH ENVIROMENTAL IMPACTS (CO 2, SO x, NO x, particles and noise emissions) INFRASTRUCTURES (existing terminals to be modified, vessels and/or barges to be built, bunker locations, relevant costs) FISCAL REGIME and PERMITTING PROCESS EUROPEAN STRATEGY AND FUNDING (e.g. LNG Blue Corridors project; CEF) STANDARDIZATION of LNG transfer processes (both marine and land transportation) www.eia.gov Map of Four European LNG Blue Corridors All the above KEY FACTORS will have different impacts due to different local infrastructure availability Potential demand for maritime LNG 12
Challenges under the EU policies In 2014-2015 a pre-feasibility study co financed by EU TEN-T program called SEA Terminal project, in cooperation with Valencia Port Foundation and Livorno Port Authority under the supervision of MIT, confirmed that FSRU Toscana can be able, with minor modifications, to perform the re-load service. Small LNG carriers can dock on the port side of the terminal and receive the quantities of LNG to be delivered in to the main Tyrrhenian ports. 13
OLT Sea terminal study outputs The pre-feasibility study that identified the capability of the terminal to perform the transfer of LNG to Small LNG carriers gave the following main output: Mini LNGC between a cargo capacity from 1,000 m 3 to 7,500 m 3 Mini LNGC Length: between 60 m to 110 m Loading rate between 250 m 3 and 900 m 3 (the timing is the same required for larger LNG carriers) Manifold in accordance to OCIMF recommendation ESD in accordance to SIGTTO recommendation. Small LNG carrier cargo capacity 7,500 m 3 Small LNG carrier cargo capacity 2,500 m 3 7,500 m 3 berthing layout Currently OLT is involved in a further project called GAINN_IT under the EU CEF (Connecting Europe Facility) program in cooperation with many industrial partners and MIT for a detailed study for SSLNG services. 14
SSLNG development news from Northern Europe 2016 September 19, the SSLNGc 7,500 m 3 Coral Methane loaded first LNG at the recently opened third jetty at the Gate LNG terminal in Rotterdam. The third jetty at the Gate terminal enables the loading of small volumes of LNG, from 1,000 m 3 up to 20,000 m 3, with the potential for increase to 40,000 m 3 in the long term. 2017 January 2, first small-scale LNG reload operation in the Lithuanian port of Klaipeda. Coral Energy loaded 15,000 m 3 of LNG from the FSRU Independence will be further transported to one of the small-scale LNG terminals in the coastal regions of the Baltic Sea. The Lithuanian LNG terminal is currently the only facility in the Baltic Sea that can reload liquefied natural gas to smaller LNG carriers. 2017 April 4, Norway Skangas new LNG bunkering vessel, Coralius, would be delivered in June. The Coralius, LNG bunkering vessel has a cargo capacity of 5,800 m 3 and is 99.6 meters long. It has a Finnish/Swedish Ice Class 1A. The ships main operation area will be from the Kiel Canal to mid-norway, including part of the North Sea. Skangas will also use the Coralius to supply the chilled fuel to Statoil s platform supply vessels and tugs along the Norwegian west coast. 2017 April 7, the world s first purpose-built LNG bunkering vessel, Engie Zeebrugge, completed the first loading operation at Zeebrugge liquefied natural gas terminal s second jetty. The Gas4Sea partnership, 5,000 m 3 LNG bunkering vessel will operate from the port of Zeebrugge supplying marine fuel to ships operating in Northern Europe. Reload SSLNGc 7500 m 3 -Gate FSRU Independence - Lithuania SkangasCoralius5.800 m 3 Source LNG World News website SSLNGc EngieZeebrugge 15 5.000 m 3
Thank you for your time www.oltoffshore.it 16