OAPEC Organization of Arab Petroleum Exporting Countries 3 rd Annual Future Prospects for LNG in the Arab Countries and Implications on the Global LNG Market Gas Industries Expert OAPEC
Agenda Setting The Scene: Latest Developments in Global LNG Market LNG in the Arab Countries: Major Supplier or Fast Growing Market? Prospects for LNG Supply in the Arab Countries: Challenges and Opportunities Prospects for LNG Demand in the Arab Countries: Challenges and Opportunities 2
Organization of Arab Petroleum Exporting Countries ~49% of the World s Total Reserves 31% of the World s Total Oil/NGL Production Transport, Shipbuilding, Investment & Petroleum Services +Training Center 27% of the World s Total Reserves ~15% of the World s Total Gas Production 3
Setting The Scene: Latest Developments in Global LNG Market Development of Global LNG Demand, MT* LNG imports in 2017 versus 2016, MT 18 MT 25 MT Source: OAPEC, GIIGNL, EVA *MT : million tons GLOBAL DEMAND IN 2017 Demand went up +25 MT, led by the soaring demand in China ANNUAL GROWTH RATE, YOY The highest YOY growth since Fukushima disaster 4
Setting The Scene: Latest Developments in Global LNG Market 300 mt DEVELOPMENT OF GLOBAL LNG EXPORTS, MT Australia 19% 250 MT 200 9% 150 100 50 US 4.6% MT 0 5 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Qatar Algeria Oman UAE Egypt Yemen Australia USA Indonesia Malaysia T&T Nigeria Others % of Arab Countries Source: OAPEC, GIIGNL, EVA Australia and the US. lead the LNG supply growth, gaining higher market share ( together ~24% in 2017) Arab countries LNG exports nearly stable at 105 mt, while market share declined from 48% in 2011 to 36% in 2017 Arab Countries 1% 48% 36% 42% MT 115 106 105 73 2007 2011 2016 2017
Setting The Scene: Latest Developments in Global LNG Market Liquefaction Capacity per Country, 2017 Source: OAPEC, GIIGNL, EVA, BNEF *MTPA: million tons per annum 85% 80% The total increase in global liquefaction capacity in 2007-2017 (~170 MTPA) The average utilization rate of supply capacity in 2017 Arab Countries: led by Qatar, represent 38% of the global LNG capacity (137.4 MTPA) Australia: supply capacity hiked from 37 MTPA in 2015 to 71 MTPA in 2017. US.: 4 trains of Sabine Pass project become online with total capacity 18 MTPA 6
MT LNG in the Arab Countries: Major Supplier or Fast Growing Market? LNG Plants in the Arab Countries Supply Distribution of LNG Exports Per Country, 2017 Algeria 11% Egypt 1% Oman 8% UAE 5% Qatar 75% Algeria 1964 Libya Egypt 1971 2005 LNG plants (full operation) LNG plants (Partial Operation<50%) LNG plants (Stopped) 1996 Qatar UAE 1977 2000 2009 14 12 Total LNG export 104.5 MT 120% 100% 80% 60% 40% 20% 0% Average utilization % of LNG plants Qatar UAE Oman Algeria Egypt Yemen Utlilized% Non-utilized% LNG plants in Qatar, UAE and Oman are near full operation. 75% is the average utilization rate of LNG plants in 2017. 10 8 6 4 2 0 Libya Yemen Egypt 2011 2013 2015 2016 2017 7
LNG in the Arab Countries: Major Supplier or Fast Growing Market Development of Arab LNG exports to regional and global markets, MT Share % Market Dependency% 17 63% Asia 35 65 48 10 29 2011 Europe 2016 27% Europe 74 26 11 MENA 8 2011 15 Americas 2 2016 2 2011 8 9 2016 Asia 97 125 56 66 9% MENA 52 48 2011 2016 1% Americas 9 91 Data Source: OAPEC, GIIGNL 8
LNG in the Arab Countries: Major Supplier or Fast Growing Market 18 15 12 9 Mt 6 3 0 Development of LNG Imports in the Arab Region, MT Egypt 34% Jordan 19% 2017 Dubai 17% A/Dhabi 5% Kuwait 25% A/Dhabi Jordan Egypt Dubai Kuwait Demand 2015 2009 2016 FSRU 5.2 bcm/y 7.8 bcm/y Jordan Egypt FSRU FSRU 7.1 bcm/y A/Dhabi Dubai MT 9 Kuwait Dubai Egypt Jordan A/Dhabi 15 1 20 2 19 19 The MENA LNG imports surpassed Americas imports in 2016! 10 4 22 3 3 23 4 21 17.4 17 16.1 16 MENA Americas 2009 2010 2011 2012 2013 2014 2015 2016 2017 7 17 MT 2015 2015 FSRU 7.8 bcm/y FSRU 5.2 bcm/y 7 FSRUs* are moored in 5 markets, with total regasification capacity of 34 MTPA 2015 FSRU 8.2 bcm/y 2010 FSRU 4.9 bcm/y Total LNG deliveries to Arab LNG markets in 2017 (50% utilization of regasification capacity) *FSRU : floating storage and regasification terminal
mtpa Prospects for LNG Supply in the Arab Countries: Challenges & Opportunities 80 70 60 50 40 30 20 10 0 2023 2028 Medium and long term SPAs* roll-off volume, MTPA Oman, 8.7 0 Egypt, 8.2 Yemen, 2.0 Algeria, 12.8 UAE, 4.3 16 17 2028 26 27 32 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Cumulative Contracting Volume *SPA : Sales and purchase agreement Qatar, 36.2 42 50 57 63 72 Incremental Contracting Volume 32 mtpa of LNG SPAs signed between Arab LNG exporters and their customers will free up according to expiry dates 72 mtpa of LNG SPAs signed between Arab LNG exporters and their customers will free up according to expiry dates. Expiration Seller Buyer 2018 Qatar Uniper 1.5 UAE JERA 4.3 Algeria Engie 2.5 2019 Algeria Engie 3.7 Algeria Engie 1.3 Algeria Botas 3.02 2020 Oman Mitsubishi 0.8 2021 Algeria DEPA 0.35 Algeria Iberdrola 1.15 Qatar JERA 4 Qatar JERA,..etc 2 Qatar JERA 1 Qatar Shizuoka Gas 0.2 2022 Algeria Cepsa Gas 0.77 2023 Qatar Centrica 3 Qatar RWE 1.1 Qatar Petronas 1.14 Average Contract volume, MTPA 1.8 0.9 Volume, MTPA 0.8 0.8 0.8 Expiration Seller Buyer Volume, MTPA Oman Kogas 4.06 2024 2025 2026 2027 2028 13 13 Oman Osaka Gas 0.66 Qatar Kogas 4.92 GNF 0.75 Oman UFG 1.65 Egypt Engie 3.6 Egypt BP 1 Qatar Endesa 0.74 Qatar GNF 0.75 oman Ituchu 0.77 Oman Osaka Gas 0.8 Egypt Shell 3.6 Qatar Kogas 2.1 Qatar EDF 3.4 Qatar Eni 2.05 Qatar Kensai 0.5 Yemen Kogas 2 Qatar Petronet 1 Qatar petronet 5 Qatar JERA 1 Average Contract Length, years 9 7.5 7 10 2013 2014 2015 2016 2017 LNG buyers appetite to sign smaller volume contracts 2013 2014 2015 2016 2017 LNG buyers appetite to sign shorter length contracts
MT Prospects for LNG Supply in the Arab Countries: Challenges & Opportunities MTPA 45 40 35 30 25 20 15 10 5 0 CAPACITY ADDITIONS IN 2018-2024 Cameron Russia US. Russia US. Australia Indonesia Australia Malaysia 2018 2019 2020 2025-2024 2023 Sources : BNEF, EVA, OAPEC, Potten & Partners, Shell Australia Russia Indonesia US. Malaysia Cameron 450 400 350 300 250 200 150 100 50 0 Emerging LNG Supply-Demand Gap Oversupplied Supply-tight 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Asia Europe Middle East N.America S.America Supply THE GLOBAL LNG CAPACITY BY 2020 -As of Jan-2018, there is 83 MTPA of LNG capacity under construction. -A next wave of US. And Australia projects will come online in 2018-2019 THE QATARI/TOTAL ARAB LNG CAPACITY BY 2024 -Qatar will boost its LNG capacity to 100 MTPA by 2024 by adding 2/3 Mega trains and debottlenecking of its existing facilities. -The project will have the lowest cost of any planned LNG supply additions globally. 11
Prospects for LNG Supply in the Arab Countries: Challenges & Opportunities Sufur Content in Marine Fuels and limits (ppm) 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 Demand Global marine fuel demand is mainly met by Fuel Oil (86%) followed by diesel (14%) Current IMO Global Limit Average Marine H.F.O 24,500 35,000 3.5% 2.45% Options Either using H.S.F.O with scrubbers or using low sulfur fuels including distillates 2020 IMO Global Limit 5,000 0.5% Transition Volume New transition is significant since it represents 75% of global marine fuel demand compared to ECA. ECA Limit Road Diesel Limit 1,000 In force since Jan 2015 0.1% LNG LNG is on top of the agenda as an alternative marine fuel to meet IMO new regulations Data Source: IMO Global Marine Fuel Demand in 2016 Barriers to use LNG as a marine fuel Very limited fleet representing 0.2% of the world total fleet. LNG bunkering availability is still at early stages Difficulty to access financing for ship building 12
Prospects for LNG Supply in the Arab Countries: Challenges & Opportunities 116 LNG-Powered Ships, as of October 2017 Ships in operation QP and Shell Formed LNG Marine bunkering venture in mid-2017 to develop bunkering infrastructure at strategic shipping locations across the globe. 112 Ships on order 228 Total LNG-Powered fleet Coast of North America (ECA) North Sea (ECA) Baltic Sea (ECA) Outlook of LNG Bunkering.? In terms of demand, MT 30 In terms of investment, M$ 22.5 8,187 Annual rate 61% 0.5 Annual rate 65% 248 Middle East (UAE, Egypt,..) East Asia (Japan, China, Singapore,..) 2017 2025 2030 Data Source: Shell, QP, TMR 13 2016 2023 Data Source: BW *ECA: Emissions Control Area(North sea, Baltic sea, English Channel
2018 2021 2019 2023 Prospects for LNG Demand in the Arab Countries: Challenges and Opportunities 3 FSRUs + 1 Onshore UAE (Sharjah) FSRU with a total regasification capacity of 5.2 bcma Morocco FSRU with a total regasification capacity of 7 bcma There are 3 FSRUs planned to be constructed in Bahrain, UAE (Sharjah) and Morocco and 1 onshore terminal in Kuwait 47 bcma (35 MTPA) The total regasification capacity of the ongoing/planned projects. Bahrain FSU with a total regasification capacity of 4.1 bcma and upgradable to 8.2 bcma in the future. Kuwait Fixed LNG terminal with a total regasification capacity of 31 bcma. Long term SPAs KPC signed a 15-year SPA with shell to deliver 2-3 mtpa starting from 2020. 1 3 14
Prospects for LNG Demand in the Arab Countries: Challenges and Opportunities Tank Area Each Tank has a Volume Capacity of 225,000 m 3 (Based on 12 Days autonomy for maximum send out) Kuwait Onshore Terminal Project Send out lines: 2 X 52 underground NG send-out Pipelines to KOC. Jetty Area Two jetty heads can accommodate LNG carriers for import from 122,000 to 266,000 m³. LNG carriers for export from 18,000 to 266,000 m³. In operation by 2021 Regasification / Process Area The Plant has a total regasification Capacity of 3,000 BBTU/day 15 15
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 MTPA Egypt Kuwait Dubai Jordan Prospects for LNG Demand in the Arab Countries: Challenges and Opportunities 21 18 LNG Demand Outlook in the MENA Region Outlook for LNG Demand It is expected to be around 16-18 MTPA over the next decade according to current plans and ongoing projects 15 12 9 6 A/Dhabi Markets LNG Markets The number of LNG markets will reach 9 including Bahrain, UAE (Sharjah) and Morocco as new comers. 3 0 New Comers Egypt Egypt Kuwait Dubai Jordan A/Dhabi Bahrain Others Source: OAPEC, Poten & Partners, EVA, BNEF, Shell outlook Demand growth coming from new comers will compensate the demand decline in Egypt 16
Prospects for LNG Demand in the Arab Countries: Challenges and Opportunities LNG imports in Egypt, MT 7.5 1 Egypt s Zohr Discovery Lowering Egypt dependence on LNG imports.. What s Next? 5.8 2 Revival of LNG exports from stopped LNG plants on the Mediterranean coast 2.6 3.4 1.2 3 Potential gas hub for all East Mediterranean gas discoveries LNG plant Proposed pipeline 2015 2016 2017 2018 2019 East Mediterranean It is a rich-gas province with a potential gas resources of 10 tcm*, discovered to date ~ 2 tcm Access to the market Most of discoveries are located in ultra-deep water > 1,700 meter. Developers will incur high costs to bring gas into market. Egypt infrastructure Idku Damietta Egypt has two idle LNG plants (3 trains) of 12.2 MTPA and can accommodate more trains. *Tcm: trillion cubic meter 17
Final Remarks Since decades, Arab LNG exporters (Qatar, Algeria, Oman, ) are reliable and secure LNG suppliers to the global markets. Arab LNG exports represented ~ 37% of the global LNG trade in 2017. The flexibility and reliability afforded by FSRUs, opened access to new markets in the Arab region (like Kuwait), to meet the growing demand on electricity, making the region the third largest LNG market worldwide. Today s LNG market is ~ over-supplied and over-contracted and the appetite of buyers is going towards contracts of smaller volumes and shorter lengths. By 2024, global LNG market will become supply-tight. By then, Qatar will boost its LNG capacity to 100 MTPA to meet future market needs. Finding new opportunities for LNG is much needed to further grow as a clean energy source. LNG bunkering is a promising opportunity to be considered. There is a potential to have a gas/lng hub in the East Med region exploiting mothballed LNG infrastructure in Egypt 18
Q? For inquiries: Eng.Wael A.Moati Gas Industries Expert, OAPEC Whamed_eng@oapecorg.org Cell: +96555157915 19