2014
Начальник Департамента
внешнеэкономической деятельности
ОАО «Газпром»
Павел Одеров
Head of LNG Export Division
LLC Gazprom export
Igor Maynitskiy
Perspectives of LNG usage
as a bunker fuel
Gazprom could challenge the dominance of oil products
in the transportation sector with small scale LNG
• Competing with oil products will increase gas demand
1
Global transport market volumes by fuel type (mtoe)
2,500
2,000
1,500
1,000
500
0
Oil products
Natural Gas
Other
2011
2,445
93%
Global transport market volumes by sub-sector (mtoe)
761
248
126
Personal Vehicles
Road Freight
Marine
Aviation
Other
2011
2,445
1,054
256
CNG
LNGV
LNG Bunkering Natural Gas
can
challenge
oil products
in these
segments
• Source: International Energy Agency online; IEA World Energy Outlook 2012;
• Note: 1mtoe is approximately 0.77mt of LNG
2014
Начальник Департамента
внешнеэкономической деятельности
ОАО «Газпром»
Павел Одеров
Changes in the underlying drivers of the transport fuel
market indicates that natural gas is able to compete with oil
products
• LNG and CNG as a fuel is a proven technology
• There are 37 ships using LNG as fuel (excluding LNG
carriers), and at least 34 confirmed LNG fuelled new
builds worldwide3
• Over 17 million vehicles are running on CNG and LNG
globally (24,000 refuelling stations)4
2
Price Availability
0
5
10
15
20
1985 1990 1995 2000 2005 2010 2015
Crude Oil
US HH
UK NBP
German Border
Historical oil & gas average prices1
($/mmbtu)
Gas has de-linked from the
increased oil prices
0
200
400
600
800
2025 2020 2015 2010 2005 2000 1995 1990
Historical and forecast of LNG supply2 (mtpa)
Global LNG volumes have
grown significantly and are
forecast to increase further Forecast
Technology Regulation
• Strict changes in regulations have emerged to
reduce emissions from the transportation sector
Source: 1) BP Energy Statistics 2013; 2) Woodmack; 3) DNV; 4) NGVA Europe
2014
Начальник Департамента
внешнеэкономической деятельности
ОАО «Газпром»
Павел Одеров
Maritime regulation change is opening an opportunity for the
LNG bunkering market to develop
3
IMO sulphur emissions limits
International Maritime Organisation (IMO)
regulations will require significant reductions
in ship emissions in designated Emission
Control Areas (ECA) over the coming years:
1 January 2015:
• Sulphur limit in ECAs will be reduced to 0.1%
• NOx for Tier I levels in ECAs will be reduced by
80%, and by 20% for Tier II (global) compliance
By 2020:
• A global cap on sulphur content of 0.5% will be
enforced
Depending on stand alone ship economics as well as
% of sailing in ECA1 zone, ship owners will have the
following options to comply:
Ship operators’ comply options
Scrubbers and
SCR*
Marine Diesel Oil
LNG
No upfront investment
Higher operating costs
Refineries may not be able to meet
increasing demand
1
2
3
Capex investments
Operational constraints
Green shipping
Security of supply is constrained by
infrastructure
Larger capex investment
Lack of Infrastructure
Currently there are 37 ships running on LNG worldwide (equal number has been ordered
so far**)
LNG consumption in North-West Europe shows that demand comes from Ro-Ro ferries
(36%), PSV (22%) and Car shuttle ferries (22%)
In Norway LNG bunkering exists since 2000 helped by the incentives posed by the
Government:
NOx fund subsidizes the cost of LNG bunker fuel projects
Clear policies for LNG bunkering
* Note: SCR: Selective Catalytic Reduction, HFO: Heavy Fuel Oil
**Source: RS Platou
2014
Начальник Департамента
внешнеэкономической деятельности
ОАО «Газпром»
Павел Одеров
Our vision is to develop an integrated SSLNG market
• Building economies of scale to reduce the cost of SSLNG as a competing fuel
4
OFF-GRID
CONVENTIONAL
LNGV & CNG
MARINE
BUNKERING
2014
Начальник Департамента
внешнеэкономической деятельности
ОАО «Газпром»
Павел Одеров
GM&T LNG operations and trading
Building a diverse portfolio with global reach
5
Cumulative Cargoes Traded
Year LNG traded (MTPA)
2005 0.1
2006 0.3
2007 0.3
2008 0.4
2009 1.3
2010 1.7
2011 2.1
2012 1.3
2013 1.5
Source country
Market country
GM&T presence
2014
Начальник Департамента
внешнеэкономической деятельности
ОАО «Газпром»
Павел Одеров
LNG – a key pillar of Gazprom’s growth strategy
6
Vladivostok LNG – 10 MTPA per annum. Commissioning –
2018 (1st line) Project status – feasibility
study completed
Sakhalin 2 Liquefaction Plant – 2 trains producing 9.6 MTPA per annum (March’09
startup)
Sakhalin 2 Expansion project – a third train ~5
MTPA per annum
Baltic LNG – 10 MTPA at 1st stage. Start date – end of
decade (1st line) Project status – pre-feasibility
stage
2014
Начальник Департамента
внешнеэкономической деятельности
ОАО «Газпром»
Павел Одеров
Gazprom’s LNG fleet today
7
Lena River Velikiy Novgorod Pskov
LNG Pioneer Ob River Yenisei River
2014
Начальник Департамента
внешнеэкономической деятельности
ОАО «Газпром»
Павел Одеров
Gazprom can build on the equity gas advantage and
become a key player in the Baltic
8
Gazprom must secure long term contracts with customers to establish in this new market. For this to
happen is necessary to:
• Build bunkering hubs in ports where the highest demand is expected
• Design/Build bunkering and feeder vessels
Equity gas in
the region
Early mover
advantage
Gazprom
expertise
Gazprom has a stronger position in the Baltic given that is the only supplier with equity gas:
• Ability to price LNG competitively
• Secure supply to its customers
Gazprom through the affiliate companies will add their expertise in LNG Shipping & Logistics
Key benefits for Gazprom
• Opportunity to build a new and additional business for Gazprom and increase market share in the EU
• Portfolio diversification for LNG trading from additional volumes of equity LNG in Europe
2014
Начальник Департамента
внешнеэкономической деятельности
ОАО «Газпром»
Павел Одеров
Current challenges on LNG as a bunker fuel
• “Chicken and egg” situation on supply and demand
• Intermodal logistic problems
• Given market formation necessity and its challenges, all interested parties should endeavor to
develop its infrastructure.
– i.e. break bulk facilities, storage, feeder vessels, bunkering barges
• Regulatory framework
– implementation of EU member states of the EU legislation to develop cleaner fuel infrastructure
– ports to establish the regulatory framework for ship to ship bunkering operations
– ports to enforce the legislation and apply fines or give incentives for LNG fuelled vessels
– industry health and safety regulations for ship to ship bunkering and industry standards
9