Post on 07-Apr-2018
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OCTOBER 2010LNG
LIQUEFIED NATURAL GAS:GLOBAL EXPERIENCE ANDECONOMIC BENEFITS
OCTOBER 2010LNG
WHAT IS LNG • Natural Gas cooled down toapproximately 161°C
• The natural gas is condensedinto a liquid
• Mass is then reduced 600times
OCTOBER 2010LNG
THE LNG VALUE CHAIN
Liquefaction
~1 USD/MMBtu
Shipping
~0.4 USD/MMBtu
Regasification
~0.4 USD/MMBtu
1 ton LNG = 52 MMBtu = 15.3 MWh ≈ 1.300 m3 of natural gas *)
*) Depending of heat value
WORLD LNG SUPPLIERS AND MARKETS
Major suppliers
01 Algeria02 Nigeria03 Qatar, Oman & UAE04 Indonesia & Malaysia05 Australia06 Trinidad & Tobago07 Egypt
01 0306
05
04
AC
D
Major markets
A Japan & KoreaB North AmericaC MediterraneanD North West EuropeE IndiaF Taiwan
E F07
?
0236
55
18
12
Japan & Korea
04
03
05B
Source: BP statistical Review 2010
WORLD LNG SUPPLIERS AND MARKETS
Major suppliers
01 Algeria02 Nigeria03 Qatar, Oman & UAE04 Indonesia & Malaysia05 Australia06 Trinidad & Tobago07 Egypt
01 0306
05
04
B AC
D
Major markets
A Japan & KoreaB North AmericaC MediterraneanD North West EuropeE IndiaF Taiwan
E F07
?
02
Source: BP statistical Review 2010
-
36
9
12
9-3
Middle East
A
D
C
E
OCTOBER 2010LNG
LNG PRICES IS USUALLY LINKED TO OIL
• LNG doesn’t have a commonprice denominator as knownfrom oil (i.e. Brent or WTI)
• Instead LNG is priced againstthe destined market
• LNG for Japan usually links toJCC crude notation
• In European markets it is Brentor NBP
• Henry Hub is widely used in USmarket
0
100
200
300
400
500
600
700
800
sep
-07
no
v-0
7
jan
-08
ma
r-0
8
ma
j-08
jul-
08
sep
-08
no
v-0
8
jan
-09
ma
r-0
9
ma
j-09
jul-
09
sep
-09
no
v-0
9
jan
-10
ma
r-1
0
USD/1000 m3
EU LNG import price span Average European LNG price
German import price
Source: IEA, BAFA, Japanese Ministry of Finance
Brent
Gas price Crude oil parity
S-curve
Illustrative
OCTOBER 2010LNG
CASE: JAPANESE LNG PRICES
0
150
300
450
600
750
0
5
10
15
20
25
2008-01-01 2008-07-01 2009-01-01 2009-07-01 2010-01-01 2010-07-01
EUR/
'000
m3
USD
/MM
Btu
Parity Indonisia Qatar Nigeria Australia Henry Hub NBP
Source: Thompson Reuters, Japanese Ministry of Finance
1-6 month
OCTOBER 2010LNG
WHY LNG IN THEBALTIC
• Security of Supply
• Diversity of Supply
• Flexibility
OCTOBER 2010LNG
THE PRESENT SITUATION FOR SECURITY OFSUPPLY IN EUROPE
low
High
Source: Ramboll Security of Supply index (RAMSOS)
OCTOBER 2010LNG
RECOMMENDATIONS FROM BEMIP
• Substantial investment ininfrastructure
• Amber PolLit
• Balticconnector
• At least one LNG terminal
• Strengthening of existinginfrastructure between Balticstates
• Promote reverse flow in Yamalpipeline
LNG terminals planned or under construction/
Balticconnector
Amber PolLit
OCTOBER 2010LNG
HOW IS IT DONE • Thorough planning
• Patience
• Brave decisions
OCTOBER 2010LNG
BUILDING A LNG TERMINAL TAKES TIME
Months600
18-24 months
36-42 months
4-6 months
Feasibility/FEEDEIAPermetting
Construction
Commissioning
Project award
First gas
Suppliernegotiations
Business processesIT systems
Financial and legalstructure
Note: Assuming a larger scale base load terminal
OCTOBER 2010LNG
THERE ARE ECONOMIES OF SCALE
0
100
200
300
400
500
0 2 4 6 8 10 12
Millio
n Eu
ro p
er B
CM
cap
acity
Total capacity of terminal (BCM)
Existing terminals Planned terminals
33
16214
14
1
20 EquipmentMaterialsPrefabricationConstructionDesign & PMInsurance & certif icationContingency
CAPEX split on work
OCTOBER 2010LNG
WHAT IS YOUR DESIRED RISK APPETITE
Commercial issues
• Number of suppliers• FOB vs. CIF• Underlying indexation• Rely on spot cargoes
Planning/permitting issues
• Third party access• Regulatory setup (ie what level of
tariffs can you expect)
Technical/operational issues
• EPC or several tenders• Operational organisation• Gas quality
Financial/structuring issues
• Capital structure• Project financing• Strategic partners• Company structure• Special purpose financing (EBRD, EIB
etc.)
Non-Exhaustive!
OCTOBER 2010LNG
THANK YOU FOR THE ATTENTION
Ramboll Oil & Gasas.com
Jack M KristensenDirector, Studies and planningE-mail: JCKK@ramboll.commTel: (+45) 5161 5670